Informative Essay on Cryptocurrency
Whenever you are doing transactions online or in-store, are you tired of forgetting your credit card somewhere, or being asked to provide your Zip Code or three-digit secure code at the back of your credit card, well say hello to easy, secure, and worldwide transactional means called cryptocurrency that avoid all this. The technologies of cryptocurrency have a major capacity and potential in changing how we do transactions drastically. Even though, the word cryptocurrency start to come to light recently, the history goes back all the way to 1983, when the American cryptographer “David Chaum” introduced and conceived an anonymous “electronic money” called ecash, which he later also implemented “Digicash”. But it was after the first decentralized cryptocurrency, bitcoin, was created in 2009, that cryptocurrency became an internet buzzword and was getting news & media coverage and became well known to most people.
There are many different types of cryptocurrency including Bitcoin, Litecoin, Namecoin, Peercoin, Dogecoin, Gridcoin, Primecoin, Ripple, Nxt, Auroracoin, Dash, NEO, MazaCoin, Monero, NEM, PotCoin, Bitcoin, Verge, Stellar, Vertcoin, Ether, Ethereum Classic, Tether, Zcash, Bitcoin Cash, and EOS.IO.
This is a clear indication that cryptocurrency started to get attention beginning of 2009 and it has been growing & expanding significantly. The majority of its customers feel more freedom, flexibility, ease of access, and enhanced security compared to the traditional banking system. Many cryptocurrency users are located in the United States, Japan, Switzerland, Malta, Estonia, the UK, France, Italy, Germany, and Canada. As the number of cryptocurrency customers grows, the number of companies accepting digital currency or cryptocurrency has also grown significantly including, Overstock.com, EGifter, Newegg, Microsoft, Expedia, PayPal, Shopify, Virgin Galactic, Dish Network, and Wikipedia. The majority of these businesses are accommodating cryptocurrency as part of their online e-commerce transaction. While both Cryptocurrency and traditional banks provide means for customers a way to do transactions online, Cryptocurrency compared to traditional banks provides more flexibility and easy access.
As stated above, cryptocurrency provides more freedom and limited regulation compared to the traditional banking system. “Since cryptocurrency is not governed by exchange and interest rates, transactions are not affected by additional fees. This makes cryptocurrency a primed means to facilitate global transaction without dealing with traditional banking system red taps”. A lower transaction fee is a huge benefit for companies and individuals who deal with international trading, import, and export using cryptocurrency. Also, compared to traditional banking worldwide transaction fees are very minimal. Cryptocurrency comes with great advantages when it comes to anonymity and privacy. Speed is another core feature of cryptocurrency, it operates on a decentralized financial system that is stored via blockchain.
Easy access to financial statements and to perform transactions is key to attracting and winning new customers in this technological era. Cryptocurrency is designed in a way to fulfill this need by allowing its customers to easily access it using handheld devices such as smartphones, tablets, laptops, iPad, and other portable devices. It is believed that there are almost 5 billion people all around the world who have mobile phones and 2.2 billion individuals with access to the Internet, thus is it very critical to be able to reach each customer via mobile phone. In contrast, the traditional banking system has not reached that level yet and most of the time, customers have to carry a banking debit or credit card in order to either access their financial statement or perform a transaction. Cryptocurrencies are accessed on a decentralized network and anyone can earn them, unlike the traditional banking system, one must have bank either a checking or saving account in order to either receive or pay for any good or service.
It is well known that major banks have been a victim of hacking that resulted in the exposure of millions of customers’ financial and personal sensitive information. As security is the core component of any financial system, the traditional banking system has to deliver well-proven means or system that protects customers’ data from any unauthorized access by any third party. Although, some banks are putting in place further precautionary measures while others are confident of the security of their systems and continue to make all card transactions fully available to their customers. However, as most banking systems are built on outdated technologies it has become increasingly difficult to keep up with the latest sophisticated attacks by hackers targeting customers financial data, and the means of online banking gateway for banks remains a risky act. Furthermore, in traditional banks there is no 100% guarantee the money saved up will not vanish, this can happen as a result of collection agencies due to several reasons such as failing to make a payment on a loan, tax due, child care support, or other related reasons. If we take PayPal for example: if the company decides for some reason that your account has been misused, it has the power to freeze all of the assets held in the account, without consulting you.
In contrast, cryptocurrency is very unique unlike traditional banking systems. Some of its functionality reduces and eliminates fraud because a payment cannot be reversed after the fact. This makes it different from debit or credit card payments, which can be under chargebacks, a feature that hackers/fraudsters can exploit. A “push” mechanism is another strong future that cryptocurrency uses that allows cryptocurrency holders to send exact amounts without giving further information to the merchant, which gives the buyer great control over the amount of information being shared. In cryptocurrency the transaction data cannot be overwritten, data manipulation is not realistic, thus makes securing data and eliminating centralized points that hackers often target. Furthermore, In using cryptocurrency, the security layer is well proven that it has been customized and adapted by major Military agencies including Pentagon.
Another great benefit of using cryptocurrency is that when customers store money in cryptocurrency format, it can be considered an investment. Investing in cryptocurrency transfers money into a bitcoin token, whereas in traditional banks it will remain in the same amount or dollar, which is called fiat currency. Fiat currencies are also highly regulated and affected by government policy. The value of fiat currencies can increase or decrease based on several factors such as job growth, import-export, stock market, and other factors. Consider when we purchase a house or a car, it is considered as an asset. Cryptocurrency is also the same thing it can be considered as a digital asset designed to work as a medium of exchange. In contrast, a traditional bank account stores currency in its current form and can not be treated as an asset. Another downside of a traditional banking system is setting up a new bank account. First, a bank need to make sure the customer is eligible to open a bank account. This eligibility age, historical financial statement check, citizenship requirement, and a valid address. Depending on the bank some of them will require a direct deposit, this has another requirement that the customer has to have a paying job in order to set up a direct deposit. Most of the time, banks will also require a minimum deposit amount, or else an additional fee will be incurred in the form of a maintenance fee. All this detailed process has to be followed before anyone can set up a bank account in order to be able to put money in the bank.
Moreover, Cryptocurrency gives its customers freedom when it comes to using their own money at any given point to perform time-sensitive transactions. In contrast, traditional banks use a daily limit set that will not allow customers to withdraw more than a specific amount as part of a security feature put in place. This could have an adverse impact on customers using traditional banking systems during weekends or holidays. Unlike traditional banks cryptocurrency does not have any restrictions on any transactions that are made by its customers and all transactions can be made 24/7 which gives absolute financial control to its customers. In addition, digital currency transactions take place at the same speed, regardless of where the sender and receiver are located.
In addition, Printing currency notes is expensive and requires the collection of old notes and that has to be managed by traditional banks. Aside from printing costs, the physical currency note lifecycle is very short and can easily be damaged or lost. Managing and safeguarding the physical monetary notes puts an additional burden on customers. It could also be a source for criminal acts, this has been an ongoing safety issue for ATM users and bank tellers, and they have to put their lives on the line when dealing with theft and robbery acts. Whenever it reaches the end of its life cycle it has to be returned to the central bank.
People travel from place to place for various reasons including business, pleasure, or personal. Usually, those travels require travelers to have money with them in order to be able to pay for any expense for the duration of their trip. Using paper money requires a declaration form and each traveler has to declare the total amount of cash they have, and if it exceeds a specific amount, people are required to either provide a detailed explanation and proof as the money belongs to the person and the purpose of using it. This creates inconvenience to travelers and adds more delay to their trip. However, cryptocurrency uses digital currency or token, which does not require a wallet or a purse to carry around. Customers can just simply secure coins using digital keys such as smartphone and other electronic use, which is subject to security checkpoints inspection and has to undergo several processes to be clear.
Anyone with an internet or smartphone can have access to cryptocurrency from any part of the world. Cryptocurrencies are digital and can not be duplicated or counterfeited. Its decentralized feature makes it harder or impossible for any government to control it, this means the value cannot be altered by any individual person or agency. As cryptocurrency is being increasingly adopted worldwide, the value is the same in any part of the world. This avoids the risk of exchanging rates and any transaction amount, and It’s considered a worldwide universally recognized currency. On the other hand, the traditional banking system does not provide complete anonymity, government has full access to bank accounts and financial transactions. Whenever we swipe a debit or credit card, we are passing our personal information to any merchant. This creates a potential security risk that, hackers can exploit and gain access to financial records and statements. This issue has been reported on major news that had an impact on millions of bank clients/customers.
In conclusion, cryptocurrencies should be a legal currency due to the reasons of higher security, enabling you to sleep easy, knowing that you have a secure investment for the future, and controllability, so that you have the final say over what happens to your money, and no bank or government can intervene. They are easy, with an account that can be made in five minutes, and one of the most profitable enterprises in the world. For these reasons, I, and many economics experts besides me, believe that cryptocurrency is the means of the future, and anyone who wishes to get the biggest economic advantage since the internet should vote to make cryptocurrency the new world currency. As Rick Falkvinge said: Cryptocurrency will do to the economics market what email did to the postal industry.
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