Cryptocurrency is catching fire around the globe, especially where it is helping to rapidly advance developing countries. So, what is Cryptocurrency and why is it changing the world?
Simply put, cryptocurrency is a decentralized digital cash system. Satoshi Nakomoto was the creator of the first cryptocurrency, Bitcoin. Although Satoshi Nakomoto did not set out to create a currency per se, the revolutionary qualities of Bitcoin’s blockchain technology made it the perfect use case for money.
What is Blockchain?
Blockchain is a permanent ledger of information stored by a great number of computers across the globe. It is near impossible to change or falsify this ledger, as the changes would need to be made to more than half of all of the copies without raising a red flag.
Think of it this way: Your friend signs an agreement to pay you back for a cash loan. To make sure they hold up their end of the bargain, you distribute copies of this signed agreement to 200 of your neighbors. If your friend decided not to pay, it would be impossible for him to retrieve every copy of the contract to destroy it.
This new ability to exchange money peer-to-peer, anywhere in the world without the need for a trusted third party is world-changing. Many agree blockchain technology is heralding a fourth industrial revolution. An article from blockgeeks.com states, “Almost every financial institution will go bankrupt or be forced to change fundamentally, once the advantages of a safe ledger without transaction fees is widely understood and implemented.”
Financial institutions have reacted poorly to the crypto revolution, choosing to both denounce cryptocurrency and imitate its innovation by rolling out bank-backed coins. In the end, financial institutions will fall short of offering everything cryptocurrency currently provides:
- Low Fees, Global Reach - Cryptos can be sent anywhere in the world to anyone, for almost free
- Secure Settlements - Smart Contracts allow people to make agreements without the need for a third party, or third pary fees, to enforce them
- Theft Protection - Encrypted digital money cannot be counterfeited like cash and prevents credit card fraud