We realized that bitcoin and ethereum are revolutionary, but what are the advantages of cryptocurrency in practice?
What makes cryptocurrency useful is not so much the goods that you can buy for them, as well as getting rid of the problems that they solve. This is the main value that they provide to the end-user. It is no coincidence that the most valuable cryptocurrencies are innovative. Take Bitcoin, which revolutionized how we carry out transactions and store values, allowing us to send money to anyone, anytime, anywhere, without any permission.
Like any great idea, Bitcoin has several followers who want to improve what it has been able to achieve. Players like Litecoin, Dash, IOTA and Ripple quickly took the stage, offering faster transactions with lower cost, improved scalability and energy efficiency. Although to some extent these altcoins are struggling to become the most popular payment system of all, the nuances keep them in different markets.
For example, Monero is an anti-tracking cryptocurrency with anonymous transactions, which allows users to maintain the confidentiality of their transactions and maintain a balance without fear that third parties will know about it. The first and most obvious use of cryptocurrency is payments, and the list of companies accepting Bitcoin to pay for goods and services is growing, and ATMs with a withdrawal function are located throughout the world.
The race began to create a standard form of payment using cryptocurrency debit cards, such as Bitpay, which will allow their owners to pay for purchases through ordinary terminals in stores. Although all this is great, the blockchain technology is not limited to the financial sector. It can be used to solve many problems existing in the modern digital world.
So now we can see hundreds of new projects with really incredible ideas. Following the ethereum, dozens of smart contract platforms were created, offering innovative solutions to problems related to agriculture, medicine, IT, logistics and almost any other sector.
For example, Sia allows you to rent unused hard disk space. In exchange for connecting this empty space to the blockchain, you will receive a certain amount of Siacoin, the project’s own cryptocurrency. Here it should be noted the difference between coins and tokens. Coins exist solely as a form of digital money on their own blockchains. Bitcoin and Litecoin are vivid examples of coins.
Tokens occupy a different niche and serve alternative purposes – for example, they represent a digital asset, a share, a fee for using the system, etc. Dragonchain, Waltonchain and Civic are ERC20 tokens. This means that they exist in the ethereum blockchain, and they all serve the corresponding utilities provided by the project.
It is important to note that the usefulness of cryptocurrency is its main characteristic: if the token has practical application and solves an existing problem, it will most likely increase in price. However, many useless coins ended up with more than they should have. For example, Dogecoin was originally a comic cryptocurrency without any value or real market use.
With a market capitalization of about $ 600 million (at the time of writing), this is probably the most profitable joke in the world. Despite some low quality projects (or comic projects), it is fair to say that cryptocurrencies do not exist in a vacuum, but depend on the value of the decentralized application, platform, or blockchain they are based on. Having understood what you read, you will most likely begin to realize that a cryptocurrency is just a great idea. So why is it ten years, and we still do not buy hamburgers for Bitcoins?
Problems of mass recognition of cryptocurrency
Despite all its revolutionary properties, the cryptocurrency industry faces a number of problems that make mass recognition a slow and even somewhat painful process. Let’s look at the biggest obstacles that cryptocurrency must overcome in order to get massive approval. In all methods of payment stability is important.
At times, the volatility of most cryptocurrencies is frightening: they can drop significantly or increase in price in minutes. This is a good chance for investors, but the average seller or consumer will not resort to cryptocurrency because of such risks. Speed and transaction costs are another drawback.
Few coins can compete with payment systems like Visa. For example, a bitcoin transaction now takes about an hour on average, and the commission exceeds $ 15. This makes Bitcoin useless for everyday operations. It is hopelessly slow and too expensive for small purchases. Not to mention the problem of scalability, which does not allow networks to process a large number of transactions over a certain period of time. Then there is the question of security.
Crimes in the millions of dollars have already occurred in cryptospace, such as breaking into the Mt. Gox. Plus, users do not always correctly use cryptocurrency. While the cryptocurrencies themselves are incredibly reliable, the “safety technique” is still evolving. Think about e-mail: it took users decades to learn how to recognize spam, infected and phishing emails. The way in which new cryptocurrency projects attract funds has led to increased control and led to discussions about regulation.
China and South Korea have banned their citizens from participating in the ICO — the initial offers of coins — and a number of other countries may well follow suit. What for? Unfortunately, several scammers managed to rob enough people by offering “new coins”. Legitimacy is the key to recognizing cryptocurrency, and cowboy-style antics create a bad reputation for them and cause skepticism about the long-term viability of the technology. Even after the ICO issue is settled, the legitimacy of using cryptocurrency will continue to be questioned. The authorities will not approve the use of cryptocurrency by citizens for tax evasion or the financing of criminal activities.
The list of problems listed is impressive, but each one of them has more than one solution on the horizon. The smartest people in the world entered the business, full of enthusiasm. Technological problems seem the easiest to overcome. Recent additions, such as IOTA, can provide unlimited scalability and almost instantaneous transactions at no cost.
The so-called stable coins solve the problem of volatility, using various inventive methods, so that the cost of cryptocurrency does not fluctuate. Security measures are intensifying, and exchanges, such as NEX, are becoming real fort Nocks of the cryptosphere. Despite all this rapid progress, the fate of cryptocurrency depends too much on the authorities. Fortunately, it is clear to many governments that cryptocurrencies have great value, which is difficult to realize until the end.
To the extent that trillions of dollars will flow into a crypto economy, many countries are likely to try to become leaders of the cryptocurrency space. Where there is money, there will be taxes. As the economy develops, investors, corporations, and users will begin to obey the new rules that will dictate the government. We will inevitably get away from the insane anarchy of unregulated ICOs. A number of countries are already laying the groundwork for this to happen.
While China and South Korea have preferred bans, Switzerland has released guidelines that build the legal framework for the ICO, striving to become the most cryptocurrency-friendly nation. Everything becomes more interesting. As soon as the bureaucrats give the green light to cryptocurrencies, companies of all shapes and sizes will not fail to take advantage of this. Naturally, the infrastructure will not lag behind: banks, commercial enterprises and service providers will catch up, and soon your grandmother will start buying Christmas crackers for bitcoins. The lights are muffled, and you better take a seat in the front row. Perhaps mass recognition will take months and even years, but the cryptocurrency is the star actor in the show, which definitely deserves attention.…