Traditional investors may regard cryptocurrency as voodoo economics, but they do so at their own peril. For centuries, we have put our collective faith in paper money, the face value of which is essentially worthless. After all, a dollar bill is just a curious collection of ink and serial numbers, but it is backed by the almighty gold standard.
Cryptocurrency has its own foundations, and they form the cornerstone of our modern economy. So, to those who eschew digital dollars in lieu of more tangible assets, we say this: you are already invested in crypto, so it’s time to get current.
Smart investors understand the need to stay ahead of trends before they leave you behind. It is vital to be proactive rather than reactive. To properly equip ourselves for the digital revolution, let’s define our terms.
Cryptocurrency
Cryptocurrency is an exchange of information in the form of quantifiable amounts. These amounts can be bought, sold and traded just like real money, but with more efficiency and, ideally, more egalitarianism. Bitcoin was founded on the concept of empowering individuals to participate in the global economy regardless of their nationality or politics.
With the state of current affairs, who can blame such a lofty mission statement?
Every night, news programs show local businesses shutting down as tens of millions of workers file for unemployment, yet the stock market seems to bounce back independent of human stimuli. Governments print paper money to prop up the illusion that their economies are stronger than they really are.
So, we must ask: how is cryptocurrency less reputable than traditional economic models?
In Tech We Trust
Individuals are already placing their trust, not to mention their hard-earned cash, into convenient technologies such as digital wallets. The software is tested vigorously to fend off hackers, the hardware is handy (in fact, it is available on your smartphone right now), and the interface is user-friendly.
The digital wallet market sector is growing at an exponential rate. In 2019, the relatively young technology accounted for over one trillion dollars of value. That number is estimated to grow by a factor of over 14 times in a mere three years. Imagine an investment that makes 1,400% ROI in the blink of a digital eye.
Users can indeed imagine such an eventuality because they are already living it. Apps such as Venmo, ApplePay, Zelle, and PayPal are dominating the way millennials and GenZ engage in the marketplace. The demand for digital wallets is clear, and it may just outshine entire nations’ economies in the very near future.
Most Traded Global Currencies
The foreign exchange market measures the pulse of worldwide trade. To get a lay of the economic landscape, let’s examine the list of the top ten most traded currencies on the global stage.
- United States Dollar (USD) – constitutes 44.15% of international trade
- The Euro (EUR) – 16.14%
- Japanese Yen (JPY) – 8.4%
- The British Pound (GBP) – 6.4%
- Australian Dollar (AUS) – 3.38%
- Canadian Dollar (CAD) – 2.52%
- Swiss Franc (CHF) – 2.48%
- Chinese Renminbi (CNY) – 2.16%
- Hong Kong Dollar (HKD) – 1.77%
- New Zealand Dollar (NZD) – 1.04%
The answers may shimmer in the vibrant possibilities presented by cryptocurrencies.
Seeking Stability Amidst Scarcity
Sustainability is a buzzword in both the environmental and economic circles. In order to achieve longevity, you must be able to produce promising results over the long term. Since the advent of fire, it seems like the goals of eco-warriors have always been at odds with industrialists and their investors, but we can all benefit from sustainability in the current digital marketplace.
Natural resources have been a major source of profit for centuries on end. Gold, oil, and coal have all driven various “rush” periods of booming economies built around the desire to excavate more, more, and ever more. The scarcity of natural resources can add to their value, but the pursuit of such materials will eventually dwindle into diminishing returns.
Scarcity does not need to be synonymous with exploitation. Economists are now focused on scarcity in the digital realm. Which methodologies offer the best solutions to balance the books? The answer often lingers in the crypto ether. As banks assess such macro issues as debt and solvency, they naturally consider what backs a particular currency. Is it on the gold standard, or something less tangible? The wealth of cryptocurrency is not based on its gossamer tether to a shiny nugget plucked from a riverbed, but rather in its foundation of innovation and cooperation.
Digital dollars are becoming more commonplace, but they are still traded on the cutting edge of our shared economy. By understanding the variability and versatility of cryptocurrency, savvy investors may be able to embrace the vast possibilities they afford.
This story originally appeared on BlockchainBeach.com. You can read it at https://www.blockchainbeach.com/how-strong-is-your-digital-dollar/