Why Cryptocurrency is The Future Of Money?

In a matter of weeks in November 2017, bitcoin flowed from an extreme and innovative investment to a global level. In mid-November, the price was around $3,000 for a single bitcoin; on December 6, 2017, it exceeded $19,000. At the time of publication, the value was flying around $15,000.

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Bitcoin is having a moment — really, it’s had a year. No matter if you think it’s a bubble about to burst, or hope your investments will pay back significant in the long run, there is one bright takeaway: Cryptocurrency is changing the future of finance. What’s not yet clear is how the technology behind bitcoin, and cryptocurrencies like it, will alter our national and global financial systems.

 

Back on the Blockchain

Bitcoin, like all cryptocurrencies, relies on a technology called blockchain that makes its transactions so secure that experts consider them to be virtually unhackable. And because the transactions are assured, the cost of verifying transactions is less than in a central bank though, admittedly, the cost of verifying bitcoin transactions has become fairly expensive.Cryptocurrency transactions happen directly between individuals instead of through a bank. Every time a person makes a transaction using a cryptocurrency — for example, using funds stored in his or her crypto wallet to send bitcoin to someone else — the transaction is recorded on a digital ledger called a blockchain. Every cryptocurrency has its own blockchain, and computers doing complex math in a large network maintain it. 

 Once users make a specific number of transactions using a cryptocurrency, the computers group these transactions into a “block.” In order to send a block, adding transactions to the blockchain and winning a monetary reward, a computer has to solve a complex math problem called a cryptographic function. 

 David Yermack, chairman of the finance department at New York University’s Stern School of Business says, Although bitcoin was created to avoid centralized banking and government money, the technology can be used as a national, centrally banked currency. In fact, the blockchain is so secure that it reduces the cost of verifying transactions, so banks are already looking into it. He further says, that in 50 years cryptocurrencies could be used as national currencies.  

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Will Our Future Be In Bitcoin?

Bitcoin was created to work outside national currencies, which is a draw to people who don’t trust central banks, says Yermack. Those who are hopeful about the rise of bitcoin may have noticed its popularity in countries like Zimbabwe and Venezuela, where it is being used as a major means of exchange when government-issued currencies have failed because of hyperinflation. Bitcoin and other means of exchange have become popular in these countries because transactions can be performed on cell phones, and their value is more stable than the hyper-inflated national currency.

 Bitcoin value sometimes changes to provide a stable, functional currency. Unlike traditional currencies, which have a value that is set by the central banking system, the value of bitcoin is turned by speculation about its worth like a stock.

Conclusion

 Most experts agree that, in the future, countries will turn to cryptocurrency, as money is already moving from the physical to the digital realm. So a method that secures digital transactions is a necessary investment, and the blockchain technology used in cryptocurrencies is a top contender. 

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