What will the future of money look like? Imagine walking into a restaurant and looking at a board with a digital menu of your favorite combo meal. Only instead of being $8.99 it shows as 009 BTC.
Could crypto really be the future of money? The answer to this question depends on the general consensus on several key decisions, from ease of use to security and regulations.
Let’s look at both sides of the (digital) coin and compare and contrast traditional fiat money with cryptocurrency.
The first and most important ingredient is trust.
It is very important that people trust the currency they use. What gives the dollar its value? Is it gold? No, the dollar has not been backed by gold since the 1970s. So what is it that gives the dollar (or any other fiat currency) value? Some countries’ currencies are considered more stable than others. Ultimately, people believe that the government that issued the money stands firmly behind it and essentially guarantees its “value.”
How does trust work with Bitcoin as it is decentralized meaning they are not the governing body that issues the coins? Bitcoin resides on a blockchain, which is basically an online ledger that allows the world to view every transaction. Each of these transactions is verified by miners (people who work on computers in a peer-to-peer network) to prevent fraud and to ensure that there is no double spending. In exchange for their services in maintaining the integrity of the blockchain, miners are paid for each transaction they verify. Since there are countless miners trying to make money, each one checks each other’s work for errors. This proof of work process is the reason why the blockchain has never been hacked. In essence, this trust is what gives Bitcoin its value.
Next, let’s look at trust’s closest friend, security.
What if my bank gets robbed or there is fraudulent activity on my credit card? My bank deposits are FDIC insured. Chances are my bank will also reverse any charges on my card that I never made. That’s not to say that criminals won’t be able to pull off tricks that are, to say the least, frustrating and time-consuming. It’s more or less the peace of mind that comes from knowing that I will most likely be healed of any wrongs against me.
In crypto, there are many options when it comes to where to store your money. Knowing whether your transactions are secured is essential for your protection. There are reputable exchanges like Binance and Coinbase that have a proven track record of fixing bugs for their customers. Just as there are fewer reputable banks around the world, the same is true in cryptography.
What happens if I throw a twenty dollar bill into the fire? The same is true for crypto. If I lose my login credentials to a particular digital wallet or exchange, I won’t be able to access those coins. Again, I cannot stress enough the importance of doing business with a reputable company.
The next question is scaling. Currently, this may be the biggest obstacle preventing people from doing more blockchain transactions. When it comes to transaction speed, fiat money moves much faster than crypto. Visa can process about 40,000 transactions per second. Under normal conditions, the blockchain can only process about 10 per second. However, a new protocol is being implemented that will increase this to 60,000 transactions per second. Known as the Lightning Network, it could make crypto the future of money.
The conversation wouldn’t be complete without talking about convenience. What do people generally like about their traditional banking and spending methods? For those who prefer cash, this is obviously easy to use most of the time. If you’re trying to book a hotel room or rent a car, you’ll need a credit card. Personally, I use my credit card everywhere because of the convenience, security, and rewards.
Did you know there are companies that provide all of this in the crypto space as well? Monaco now issues Visa cards with the logo that automatically convert your digital currency into local currency.
If you’ve ever tried to transfer money to someone you know, the process can be very tedious and expensive. Blockchain transactions allow a user to send crypto to anyone in just minutes, no matter where they live. It’s also much cheaper and safer than sending a bank transfer.
There are other modern methods of money transfer that exist in both worlds. Take apps like Zelle, Venmo, and Messenger Pay, for example. Millions of millennials use these apps daily. Did you also know that they are starting to include crypto as well?
The Square Cash app now includes Bitcoin, and CEO Jack Dorsey said, “For us, Bitcoin doesn’t stop at buying and selling. We believe this is a transformative technology for our industry and want to learn as quickly as possible. ”
He added: “Bitcoin offers an opportunity for more people to access the financial system.”
While it’s clear that fiat spending still dominates the way most of us move money around, the fledgling cryptosystem is quickly gaining ground. The evidence is everywhere. By 2017, mainstream media coverage was hard to come by. Almost all major business news now covers Bitcoin. From Forbes to Fidelity, they all have their say.
What is my opinion? Perhaps the most important reason Bitcoin can succeed is that it is fair, inclusive and provides financial access to more people around the world. Banks and large institutions see this as a threat to their very existence. They will be on the losing end of the greatest transfer of wealth the world has ever seen.
Still undecided? Ask yourself, “Do people trust governments and banks more or less every day?”
Your answer to this question could be what determines the future of money.