You’re out to dinner with your friends and order a lavish filet mignon and glass of merlot. As the check is delivered, you reach for your wallet and realize you left it on the coffee table at home. Embarrassed, you break the news to your friends that you don’t have any cash. Who has been there? *Slowly raises hand*
This scenario could dampen anyone’s evening. “I’ll pay you back soon,” you say to your friend as they throw down their credit card to pay for your pricey meal.
Fortunately, digital currency is swooping in and saving the day. Rather than paying your friend back in two weeks, you can whip out your smartphone and quickly reimburse them before you leave the restaurant.
Online payment systems enable users to instantly pay for services and goods (or in this case, reimbursing friends). With cash becoming more and more obsolete, digital currency is becoming popular and a convenient service to quickly exchange money, hassle-free.
Diving Deeper into Cryptocurrency
Cryptocurrency may be one word that makes you want to run in the other direction. It’s a confusing and convoluted subject if you’ve never heard of it before. Let’s break it down.
Cryptocurrency is a digital currency built with cryptographic protocols and cannot be controlled by a central bank. For example, Venmo and PayPal, two popular online payment methods, are not considered cryptocurrency because the transactions go through a centralized network and use a credit card number or banking account to complete the payment requests.
One of the main benefits of cryptocurrency is that it’s simple to process transactions, allowing users to avoid service fees charged by traditional banks and other institutions. In simple terms: “Cryptocurrencies offer cheaper and faster peer-to-peer payment options than those offered by traditional money services businesses, without the need to provide personal details.” (Source: PwC)
“Bitcoin is a remarkable cryptographic achievement and the ability to create something that is not duplicable in the digital world has enormous value.” – Eric Schmidt, CEO of Google
The most popular form of cryptocurrency is known as Bitcoin, which entered the market in 2009. The currency exchange service “provides a personal Bitcoin wallet and allows a user to send and receive bitcoins with them.” (Source: CNBC) Fun fact: the anonymous inventor of Bitcoin goes by the pseudo-name Satoshi Nakamoto, and he or she never intended to invent a digital currency.
Businesses also reap the benefits of cryptocurrency. With low transaction fees and a decreased volatility risk, bitcoin or other forms of cryptocurrency are a useful and beneficial service that more businesses are adopting and utilizing every day. Plus, digital currency also eliminates the possibility of chargebacks.
The Building Blocks
Cement, steel beams, glass, and other elements construct skyscrapers. Now consider virtual infrastructure. Similar to the components that support buildings, cryptocurrency is supported by blockchain technology. Simply put, blockchains keep a record of all data exchanges, and each data exchange is a transaction. A blockchain is managed by a cluster of computers that are not owned by a third-party.
Are you still with me? Good!
Cryptocurrency in the Real World
Cryptocurrency is slowly creeping into our everyday lives. Recently on May 23, 2019, AT&T announced it will be the first mobile carrier to start accepting online payments in cryptocurrency. Customers will be able to use a service called BitPay that helps businesses accept payments in bitcoin.
Facebook friends will also be able to share more than just photos and messages. The social media giant has recently announced a new digital currency titled Libra that will be launched next year.
Anyone who has Facebook’s Messenger service, WhatsApp, or uses the stand-alone app will be able to access Libra through a digital wallet. “It is an alternative to bitcoin that is powered by blockchain. However, Facebook hopes it will be used by a much wider base.” (Wall Street Journal)
The benefit of Libra is it will provide financial services to millions of people who may not have access to a bank account. It also can benefit small businesses that can’t gain access to credit.
Whew… that was a lot of info, but now you understand the basics of cryptocurrency and the impact it’s making on the global economy. In conclusion, cryptocurrency is a digital currency that is developed through blockchain technology. It’s an efficient payment system that allows users to avoid additional fees charged by traditional banks. More and more companies around the world are adopting digital currency services every day.
Plus, cryptocurrency is a lifesaver when you accidentally leave your wallet at home. Don’t worry, we’ve all been there.