Since 2009, cryptocurrencies have gone a long way. Once used by the chosen few, they are now a common payment method around the world. These digital means of exchange offer convenience that fiat currencies cannot give. Here is why the world is embracing virtual money.
Today, the highest rate of cryptocurrency use in Europe is observed in Spain, Ireland, and Greece. English-speaking nations, Asian and African countries are all seeing a rise in virtual transactions. Meanwhile, the emergence of the crypto debit card allows EU residents to turn their cryptocurrency into Euros, and use it like any other card. So, what made all of this possible?
What Defines Crypto
These means of exchange are generated by individuals and groups. Most of the systems are not affected by government regulations, which is why they qualify as alternative currencies. They exist beyond the scope of national monetary policies. Bitcoin, the pioneer currency, is now accompanied by:
- Zcash, and
- thousands of other coins.
In fact, new types emerge monthly. All of them are based on cryptographic protocols. These are elaborate coding systems that provide transfer encryption. These defenses are built using complex mathematical models and computer engineering. As a result, they are next to impossible to break. The same applies to duplication or counterfeiting attempts.
Control Is Still Decentralized
So, why aren’t the world’s governments able to control cryptocurrencies? The value of such currencies is based on supply and demand, both of which depend on the activities of their users, as well as intricate protocols. They are not affected by the policies of central banks or other regulators. The biggest driving force is mining — the activity of users with huge computing power who validate transactions and receive new cryptocurrency as a reward.
The supply of most crypto coins is finite. This is because instructions in their source codes define how many units may be in circulation ever. This peculiarity makes these means of exchange more similar to precious metals than fiat currencies. They are inherently deflationary.
Benefits for the Public
Bitcoin and most of the altcoins are politically independent systems. In addition, they have virtually impenetrable security. No conventional currency, not even the US dollar, can provide the same advantages. For example, a government may easily seize or freeze a bank account denominated in a fiat currency. If the funds are kept as cryptocurrency, it is powerless — even if the holder is a citizen.
Payments with cryptocurrencies are transparent peer-to-peer transactions. They are visible to everyone but also secured through powerful algorithms. Only the owner of the coins being transferred can decrypt them using a “private key.”
Critics argue that crypto coins are often used for shady transactions. They are also more volatile than traditional systems. Still, these attacks have little effect on the adoption of cryptocurrencies. Bitcoin and its alternatives are a great choice for individuals who want to make transactions beyond the world governments’ control.