Why was Cryptocurrency created?
Software is conquering the world, and that includes money. Most financial transactions today are digital. In 2019, e-commerce had sales of $ 3.53 trillion. The problem with digital payments is that intermediaries oversee (and, of course, require trust) all payments. This means that the intermediary organization has the ability to monitor your financial activities, prevent transactions or reverse them. Even in the worst case scenario, it is possible for the organization to confiscate your funds. This is the biggest problem of concentration.
This makes a big difference to cash; Physical cash is transferred on a peer-to-peer, private and non-refundable basis. Of course, even if you use cash, you still have to trust your government. In fact, it is the government that, as the main backbone of money, should not allow its value to decline or inflate over time. The problem with cash is that you have to be in the same country where the money is exchanged to exchange it. Although some people were well aware of the need for e-money and peer-to-peer, unfortunately almost all efforts in this area had failed. But during the economic crisis of late 2008, an article entitled “Bitcoin: A Peer-to-Peer Electronic Money System” was published by an anonymous person nicknamed Satoshi Nakamoto.
Bitcoin was the first project to solve all the problems faced by other digital money projects. Spending twice (spending money in two different places) was one of the biggest problems. With the advent of bitcoin, many other projects followed this digital currency, and in fact bitcoin gave rise to a large number of different digital currencies. Most digital currencies are based on the Chinese blockchain. Blockchain is an advanced technology that brings the following four crucial features to all of these digital currencies:
-Being independent and decentralized
-Open source and transparency
-Resistant to censorship
-Peer-to-peer and essentially private
This means that people can move capital without the need for oversight and certification by intermediary organizations, as well as concerns about a country’s borders. Therefore, the costs of capital transfer are relatively low and there is no intermediary organization that has a share (commission) in this transfer. The only fee you pay for the network is that it is responsible for verifying your transactions.
With digital currencies, businesses no longer face restrictions on banks or payment processing companies in terms of their financial payments, as there are virtually no such intermediaries. Everything happens in a pervasive network, where you do not need to provide personal information, disclose financial information or pay extra to use these services; All you need is an internet connected device. It is good to know that around 2 billion adults around the world do not have any bank accounts. For this reason, these people have to pay heavy fees to companies such as Western Union for their financial transfers between different countries. Digital currencies solve this problem perfectly, especially these days when buying a smartphone is much easier than opening a bank account.
People who believe in digital currencies say that these types of currencies can easily be the next step in the evolution of the concept of money. For the first time, we have a currency that has not been issued by any government or bank and is based solely on computer code and cryptographic technology. Experts believe that by removing humans from financial processes, the possibility of corruption and unwanted mistakes will be reduced to zero.