As we saw in the previous chapter, cryptocurrency are not just a passing fad. Some see them as the future, while others call them scams. Regardless of what you think, many people believe that they are the future of money in general. This belief can only be reinforced now that banks and financial organizations around the world are showing such interest in it.
If you have just entered the world of cryptocurrencies, you may not have realized that their monetary aspect was only the tip of the iceberg. Good cryptocurrency are also supported by solid practical ideas to improve a way of doing things or to invent entirely new ways of doing things.
Take Bitcoin, for example. The reason for the creation of Bitcoin was simple. The aim was to meet the perceived need for a digital currency that could be used to conduct peer-to-peer transactions on the Internet. That is not exactly what it has become, but that was its original purpose. Its initial concept was also linked to mistrust of banks following the 2008 financial crisis.
Cryptomeria allow you to refrain from using a bank. Still utopian in highly developed societies, but many “unbanked” countries in Africa or Asia are really starting to use crypomoney in their daily lives via their mobile phones.
Another important point in most cryptocurrency is to have a finite number of coins in circulation and to have controlled and programmed inflation (or even deflation). This is in total opposition to our current currencies where a central bank can create money on demand: since the 2008 crisis, European central banks have created “ex nihilo” several thousand billion dollars in order to inject them into the economy (or more precisely into banks). This problem of unlimited money creation and global debt is not solvable and will probably end very badly.
In this field, not everything can be summed up in cryptomony: blockchain and data decentralization are the subject of great interest in the business world and beyond. The blockchain is an excellent way to store highly confidential data while facilitating its update by users based anywhere on the network. It is essentially a giant database, but it does not have the limitations associated with the current operation of most databases.
To simplify, a regular database is maintained on a central server (computer). It can be accessed by other computers, but if the information needs to be updated, it can usually only be updated by one person at a time. For this to happen, the information must be offline while it is being modified, and then it must be uploaded again once the modifications have been made.
This can make the information in the database obsolete. It will be impossible for anyone else to make changes to a file currently updated by another user, as it will be locked until it is put back online. The blockchain modifies the whole process. It allows multiple simultaneous changes to be made by an unlimited number of people without the need to take the files offline. Data updates occur automatically on all files in the system at intervals of a few minutes.
Applications designed for a system capable of operating in this way, i.e. a system capable of ensuring the privacy of private data, are the subject of enormous interest in a wide range of sectors, including health systems and governments. We will discuss the notion of blockchain in more detail in the next chapter.
Let’s go back to the cryptocurrency themselves. Why are they so interesting? As we have already seen, the idea was to ensure their functioning without the support of a central organization, a bank, etc. Ultimately, if you want to make a cryptocurrency purchase, whether it is a luxury yacht or a box of chocolates, only you and the person from whom you purchased the item will know the details of that transaction. Basically, the benefits are similar to those of using species.
The truth is that this loss of control frightens governments and financial institutions: that is why some governments like China’s have banned their use.
Most cryptocurrency will never be usable in this way, as their structure will never be flexible or fast enough to allow it. As new currencies appear on the market, many of these problems are finally solved. The cryptocurrency development community strives to create cryptocurrencies that can evolve on the fastest and most scalable platforms, capable of handling increasingly large transactions on a daily basis.
Beyond the Internet, cryptocurrency has the potential to completely replace any other form of hard currency. In the near future, we may simply scan our digital wallet in the corner store to buy our provisions. The transaction would be instantaneous, secure and less expensive.
All this is still far away and for the moment, the products we can buy with our cryptometers are limited. The number of ways to spend them and the number of retailers who are happy to accept them continues to grow. For the moment, you can use them for the following purposes:
- Travel: An increasing number of airlines and travel agencies accept Bitcoin
- Luxury items: Yachts, cars, works of art and jewellery can be purchased using cryptocurrency.
- Charity: Charities are currently adopting cryptocurrencyy for donations, as it allows them to receive all the amounts sent to them.
- Real Estate: Luxury apartments have recently been sold in Bitcoin
- Shops: More and more local shops allow you to pay in cryptocurrencies (bars, restaurants, retail shops). This is even more obvious in Japan, where the use of cryptocurrencies several years ahead of Europe or the United States.
Here are some names of famous companies that currently accept Bitcoin, according to steemit.com: IBM, Dell, Microsoft, Tesla, Virgin America, Expedia.com, Cheapair.com, Netflix and even Subway. The complete list is much longer and it can only continue to grow, as is the selection of accepted currencies.
You may be wondering how you could get into a Subway restaurant, order your sandwich for lunch and pay in Bitcoins. Well, know that you don’t need to use whole units of Bitcoin or any other cryptocurrency. You can simply spend a small fraction of one of your coins: it is part of the beauty of digital money. The smallest unit of the bitcoin is 0.0000000001 bitcoin, it is commonly called “1 satoshi”.
Similarly, payment terminals (via the Indian company Pundi X for example) or cryptocurrencyy payment cards are also being developed. Of course it will take years for everyone to access it, it is a growing market. Some analysts compare the blockchain market to the Internet before the 2000s.
It must be admitted that at the moment, cryptocurrencies are mainly used as investments. As we have seen with Bitcoin and Ethereum, significant value gains can be achieved in a very short period of time. However, it is wise to remember that these huge gains are not guaranteed. It is also possible to suffer enormous losses. Currently, volatility is very high in the cryptocurrency world, prices should experience less fluctation as the number of users increases over time.