Evolution is the essence of human existence. Right from hairstyles to footwear, evolved has everything.
Online marketplaces have replaced physical stores, books have become eBooks, and keypad phones are now a thing of the past, with smartphones flashing around in the open.
Wait, why am I talking about evolution while we are supposed to discuss Cryptocurrencies?
That’s because Cryptocurrency is also a product of evolution or progression. It is a result of consistent improvements in the medium of financial exchange.
Well, financial evolution, as far as I know, began with bartering. Obviously, I am not an expert at it but still, let me just brief you with how the medium of exchange has transformed.
Medium of Exchange Over the Years
There’s always a common goal, concerning the public at large, that leads to a change. In ancient times, the purchase of goods used to happen with the exchange of goods in return. There was no standard currency to facilitate a transaction, so bartering was the only way. It was easy and sorted but lacked reliability.
The apprehension in a barter exchange was whether two mutually interested people would find each other. For example, someone in need of rice in exchange for wheat had to find another person ready to sell rice for wheat.
People dearly felt the absence of a value-based medium of exchange. Knowing of the hardships in financial matters, intellects across the globe advised their respective rulers to introduce coins and receipts to smoothen the flow of trade and commerce.
The sole purpose was to make the exchange of goods and services more comforting for people. However, it wasn’t until the introduction of paper currency as a legal tender that we reach some sort of financial stability. Checks and cards facilitated its usage and accessibility.
Backed by the Central Banks, such modes of exchange attract confidence and reliability. But are they enough for a world primarily driven by the internet?
Is Paper Currency Enough?
‘A’ lives in the United States, and, one day, while scrolling on social media, he finds a nutritional product he had been looking for for a long time. He lands on the website to place an order but discovers the seller’s location is India.
Now, he cannot order because he cannot pay the seller in USD, for it is not the currency of India. He tries to use an external payment website only to find it applying high exchange surcharges for converting USD into INR.
He is stuck and cannot purchase the good. Not because he cannot pay for it but because of the lack of a suitable payment mode.
In the situation above, A wasn’t incapable of paying but was rather helpless due to the restrictive nature of currencies. Notes and coins of several denominations have legal backing in their respective countries, and one can even make international purchases, but the process for the same isn’t smooth and swift.
Why Cryptocurrencies Are Gaining Traction?
Every new innovation brings with itself an improved version of what is already there. The need of the hour is to have a currency that is safe and freely exchangeable across the globe in return for goods and services.
Most tech experts believe that Cryptocurrency has the closest potential to becoming an alternative to the traditional currency. But, before diving into any further details, it is necessary to learn what exactly a cryptocurrency is.
What is Cryptocurrency?
It is a virtual currency, with no physical form at all, that is encrypted through cryptography. You can use Cryptocurrency just like the ordinary currency to purchase goods and services, do trading, etc.
The fact that central banks do not control cryptocurrencies has both pros and cons. The most significant advantage is that it remains untouched by government regulations and interferences.
On the other hand, a downside of the equal magnitude is that it makes it unreliable and volatile. Since it works using the blockchain technology, the security of cryptos is unmatchable.
Currently, they are not in common usage like a regular currency but are increasingly becoming popular in several countries.
Trading in cryptocurrencies is becoming an everyday affair, and with the arrival of numerous online platforms, it has become even more convenient to invest in cryptocurrencies.
It is astonishing to note that there are over 10,000 cryptocurrencies having their combined monetary value in trillions. The market sentiment around them is very positive, and the fact that they are the future adds to their positive aspects.
Since more and more people are witnessing an inclination towards cryptos, I am specifically aiming to bring out a series of blogs about cryptocurrencies.
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