With the evolution of technology and digitalization, a new form of currency has emerged, called cryptocurrency. And although most people are hesitant to join the trend, it’s likely that this will become the new norm for this generation, if not all generations to come.
Today, most dream companies to work for use crypto not only as a way to deal with finances with clients but also as a way to pay employers. This means, if you want to work for a company like this, you’ll have to adapt to this new payment method. Furthermore, a lot of the best self-employed businesses decide to use this method for various reasons.
To further familiarize ourselves with this method and why it is becoming our future, we must know what this is, and why it is better than any other method around. Additionally, if we want to adapt fully to cryptocurrency, we must also know the negative side of the method, and prepare for liabilities.
What is Cryptocurrency?
A cryptocurrency is a digital, encrypted, and decentralized medium of exchange that is based on blockchain technology. Today, there are more than five thousand different cryptocurrencies on the market, the most well-known being Bitcoin. Crypto can be used to buy products and services, but most people use it to invest in stocks, precious metals, and other assets.
Unlike most currencies, there is no single, central authority that manages and maintains its value, which can be very dangerous if the owner is not prepared for liabilities. Instead of being managed by a single authority, crypto is distributed among users via the internet.
What is a Blockchain?
As mentioned earlier, cryptocurrency is based on blockchain technology. This technology records each transaction in code. It can be likened to a checkbook distributed across computers around the world. Recorded transactions are called “blocks”, and these are later linked together in “chains” of previous transactions.
To prevent fraud, all of the recorder transactions are checked using one of two validation methods called “proof of work” or “proof of stake”. Both of these are methods of verifying transactions, but if you use “proof of stake”, you can reduce the amount of power needed to check transactions.
Proof of stake is like bank collateral, where the number of transactions a person can verify is limited by the amount of crypto they’re willing to “stake”. Proof of stake is much more effective, offering faster verification times for each transaction.
Advantages & Disadvantages of Cryptocurrencies
Knowing that this is still a growing technology, people might ask why such large companies are utilizing this fragile method. A simple answer is that the advantages are great, and the disadvantages can be avoided by taking the necessary safety measures.
A cryptocurrency transaction is a quick and straightforward process that causes little to no headache. Most transactions can be done by a single push of a button on your smartphone, making it very easy and effortless. A lot of consumers prefer this mode of payment just because it’s easier.
Furthermore, each transaction is recorded in the blockchain, making it possible to trace the origin of Bitcoins. Blockchain also cuts out intermediaries like banks and other entities, meaning that transactions are cheaper, and there are no processing fees. It also allows anyone to become anonymous while making payments, which a lot of people prefer.
Some disadvantages include the significant and sudden changes in value, the lack of rules and regulations, and more. Cryptocurrency can become obsolete and lose all of its value once people stop using it. This is highly unlikely, but still a liability.
Additionally, it is possible to lose your entire virtual wallet or delete your currency. Hacking is also highly dangerous, as there are untraceable thefts happening on a daily basis. This means everyone using cryptocurrency, especially companies, need to be prepared for the vulnerability of the medium, and have a plan against cyberattacks.
The rise of cyberattacks also means that companies can lose reputation due to them, and they must have a recovery plan if it were to happen.
The Rise of Crypto
Because of this, Bitcoin has hit an all-time high price, impacting the industry greatly. Because more people became interested in the trend, the value grew, attracting more people to the medium, entering a seemingly never-ending loop. Everyone from Bill Gates to that weird kid you knew in high school has a lot riding on the future of crypto.
The skyrocketing of this trend has brought on the attention of a lot of government agencies who are working on regulating cryptocurrencies to make them more manageable, and overall safer for the user.
These regulations are being put into place not only to establish basic guidelines and laws to make cryptocurrency safer but also to make it less appealing for cybercriminals. Clear regulations would be welcomed by users all over the world and would benefit the industry greatly.
Today, a lot of countries have authorities regulating crypto, but still, there are places where this is missing, and even the areas that have regulations in place are imperfect.
China took a firm stand in this matter and made all crypto transactions illegal within the country’s borders. In the United States, regulations are less clear, and the debates are still ongoing about how to manage the evolution of crypto. The most likely outcome will be that the regulations will continue to differ state by state.
But while people are waiting for new regulations to step into action, there are active investors counting on the stability of their holdings. For them, new regulations can mean the loss of everything, or something entirely different.
Whatever the future might hold, experts believe that sensible regulation will do good for the industry. It will most likely win over a lot of hesitant people who have not yet begun using the method and will make it possible for authorities to manage already trending currencies.
The Future of Cryptocurrency
A lot of mainstream, well-known companies are beginning to take interest in cryptocurrencies. Various companies have already stated that they will be accepting Bitcoin payments in the near future. In the meanwhile, Fintech companies like PayPal are making it possible to buy crypto on their platforms.
As more large companies are leaning toward the acceptance of crypto, the credibility of the medium is growing, and the inflow of attention will grow tremendously in the upcoming years, making crypto not only a way of investing but a way of paying for groceries.
Companies like Amazon and Walmart are already recruiting crypto experts to create and oversee blockchain strategies. In 2021, the foundation for mainstream crypto usage is being laid, and people are eager to see what the future will hold for this method.
To see the future of cryptocurrencies, it’s enough to look at the growth of Bitcoin. As the first cryptocurrency, and the most trending today, Bitcoin is a great indicator of the market in general. In October of 2021, Bitcoin reached an all-time high price for the second time this year.
And while this demonstrates a linear climb in value, there have also been significant drops in the past, meaning that the volatility and liability of Bitcoin’s value is still a cautionary tale, and experts recommend managing high investments for safety reasons.
But seeing these all-time high prices, people may wonder how high will it go? Most experts believe that there will be short-term volatility to prepare for, and long-term growth to await. Whatever the case, experts recommend staying cautious and aware of the disadvantages, but expect high rises in value in the upcoming months and years.
The reality is, that even though a lot of people are getting used to its existence, and a lot of high-end companies are beginning to grow accustomed to this method, still a lot of speculation surrounds the matter.
Cryptocurrency has a small history, therefore there’s not much to build on, and not much to use as calculations for the future. Experts can only use day-by-day data to calculate outcomes, but in reality, this area is changing and evolving by the minute, and all information can become obsolete in a matter of hours.
The only thing people can do is prepare for the worst and invest for the best outcomes. It’s very important to protect our valuables, and today, this means protecting intangible things like data and cryptocurrencies as well. Keep your investments small, but smart, and don’t prioritize crypto investments above any other form of financial goals and financial safety measures like savings.
Today, there’s not much else people can do to ensure their safety within an ever-changing environment other than staying aware, staying educated, and cautious while remaining curious and adventurous.Updated Date: 19 November 2021, 10:39