Cryptocurrencies have democratized the way one person sends funds to another by cutting out the middleman. The result is a faster, more transparent, and more secure way to do business.
It is not a secret that cash is becoming an antiquated method to make a transaction. Unlike digital payments, which leave behind traceable records, cash can be tendered anonymously, allowing it to play a part in various types of organized or financial crimes. In addition to this, it is simply inconvenient.
For these reasons, the use of debit cards, PayPal, and other methods of moving money electronically have become commonplace. They marked a significant improvement over the handling of cash and its apparent drawbacks. Nonetheless, we are on the cusp of another revolution in the world of transactions.
Cryptocurrencies have democratized the way one person sends funds to another by cutting out the middleman. The result is a faster, more transparent, and more secure way to do business.
Business at the Speed of Thought
Bill gates argued that integrating the latest digital technology into business practices is essential to achieving maximum efficiency. Many large firms, such as Dell, Microsoft, and Dish, now accept cryptocurrency payments, in large part because of the swiftness with which they can occur.
Most traditional types of digital payments, such as bank transfers, require approval from an intermediary (in this case, the bank). This delays the amount of time it takes for the money to move from the sender to the recipient. With cryptocurrency, however, the transactions are not verified by an institution, but by selected users via a transparent protocol. Also, due to scaling improvements, many cryptocurrencies can support high volume transactions, making them a legitimate method to move money.
(Image source: Pixabay.com)
Why Decentralization Is Important
Another way in which the blockchain technology that supports cryptocurrency has modernized the global payment system is that it offers a decentralized model for transferring money. In traditional banking systems, banks and governments become confluences of power, leaving participants in the money exchange system dependent on their effectiveness and integrity. As the financial crisis of 2008 indicated, such vulnerability leaves a lot to be desired.
With blockchains, however, there can be no central point of failure like that of a bank closing. Instead, responsibility for approving transactions is spread among users, and protocols offer users financial incentives to engage in active and fair participation in the verification process. The result is a more resilient financial system that does not depend on a central aggregation of power.
Moving Towards Safer Money
In addition to allowing users to avoid expensive merchant fees, cryptocurrency is changing global business practices by offering a more secure method of transferring money. The transparency of the blockchain and its fast verification allows the user to send money with confidence, as opposed to other methods that take days or weeks to process.
A decentralized system also means that the user no longer has to trust the business practices of a bank or lender. This lends greater stability to the infrastructure of the system. Moreover, the use of a cryptocurrency prevents a central institution from being able to sell your private data, further protecting your personal information.
With such advantages, it is no surprise that the use of cryptocurrency has increased exponentially.