Decentralized Currency Benefits You Can Bank On: Separating Fact from Fiction
There has been a lot of talk about how decentralized currencies bring a lot of benefits to our modern monetary system – yet governments and companies alike are very reticent to use them. That is because the decentralized currency can pose problems to both governments and companies that want to use them.
These problems, once solved, will allow the world economy to start growing faster than it ever has before, and could possibly usher in a new age of information on par with the internet revolution that happened from the middle 90s to middle 00s.
So what benefits do decentralized currencies really offer that centralized currencies do not?
Security in Every Transaction
When talk of security arrives, people usually point to the hacking of various exchanges to show that decentralized currency isn't all that secure. This might be true for certain aspect of security, and it is something that both blockchain and cryptocurrency communities are working on solving as best as possible.
However, what is also true is that your money is your money despite anything happening to a bank. If you keep your money in a vault or decide to keep your funds in an offline wallet, only to be used when the need truly arises (much like a savings account), then the picture drastically changes.
Today we entrust all our money to banks that are guaranteed by governments, but this isn't a good thing at all. Look at the problems that lead to the economic crisis of 2008. Banks were considered “too big to fail,” and the US government had to bail out banks that would have collapsed the entire world financial system if they had allowed them to go under.
If the same situation happened with a bank that held dealt with cryptocurrency, the situation would have been much far different. Your crypto is your crypto – the losses would not have been as large to the average person, and the government could have let a bank that got sloppy to die simply.
Instead, we got a situation that bankers got paid billions, took their bonus checks and left the taxpayers with the burden of financing their businesses.
There is also the security of cross-border payments. Currently, there is a wide, tangled system that supports cross-border payments. You cannot simply send money to a friend in another country (o even another bank) without going through a number of different institutions that are there to balance the books and afford checks and balances.
Blockchain solves this problem and gives you true security. If you send Bitcoin to someone across the world, all they need is a wallet, be it a company or a person. The actual currency arrives in their wallet within 24 hours (with Bitcoin, other systems are instant) and you have the funds withdrawn from your account.
It does need to go through a [payment processor, a series of banks and inter-continental checks to finally arrive at the end point.
The security and speed at which cross-border transactions can be done is enough reason to switch to a blockchain based currency, but it will take time. In fact, the benefits are so big that even large banks are getting in on the action. JP Morgan Chase is experimenting with blockchain ad are a number of other banks simply because they would cut costs massively by not having to go the traditional route.
Easy access, disaster-proof
So long as you have a wallet, you have your money. A wallet can be offline; it can be on a mobile phone or on your computer. It is much easier to download an app and start transacting with cryptocurrency that it is to create a bank account that you need to keep up with and pay for the privilege of using.
While it may scare many people to leave their money in something as intangible as an electronic wallet, it is far safer than normal currency. One big change to the world has been mobile phones. It has opened up communication in countries that were previously highly underdeveloped. You don't need too much power for a mobile phone.
In Africa, the race is on to get everyone connected, and it is being done with mobile phones. Where it was previously impossible with fixed lines, now a vast majority of the population has a smartphone that is capable of wondrous things.
This same logic applies to cryptocurrency. What was once difficult and only for highly developed countries is now possible for everyone so long as they have a mobile phone – and that means the vast majority of the world.
In fact, The British Virgin Islands government is looking to create a cryptocurrency that would be usable even when a hurricane hits. People would be able to receive donations from abroad and use them without having to worry if an ACH is working int he region or not.