Through my conversations with friends, family, and strangers about cryptocurrency, it is clear to me that most people do not fully understand the potential that Bitcoin and other cryptocurrencies have. That isn’t their fault–the Bitcoin community hasn’t done the best job of communicating the problems that cryptocurrencies can solves, the potential benefits of implementing a system with digital currency, or why we even need to replace the system that we have.
Let’s start with the problems that the current system has and how digital currency can fix them.
Oversupply/Susceptibility to Inflation and Devaluation
Currency as we know it comes in the form of bills and coins. These can be issued at any time without any limit or hard cap on the total supply. If corruption infiltrates our government and decides to print as much currency as they want, there’s not much there to stop them. We don’t vote on the currency supply–we don’t even really pay attention to it as members of the general population. Think about it: if the US government suddenly prints $100 million, doesn’t that make the dollar bill in your hand more common? Less valuable?
Bitcoin has a fixed supply. There will only ever exist 21 million Bitcoin in total. Most cryptocurrencies have a fixed supply. This can only ever be changed through a voting system that would change the code to allow for a larger supply. This ensures that the people using the currency have control over the supply and can prevent oversupply and inflation.
Privacy issues occur every day in the financial world. You may have even experienced this yourself. Every time you buy something online you have to put in numbers that if compromised, could affect your ability to purchase essentials like food, rent, and electricity. Credit card numbers cannot be easily guessed but they can be easily skimmed. This can be done through a physical device placed on the reader or hidden in a malicious website. It’s insane that we trust our financial security to numbers that we have to enter and expose daily.
Bitcoin transactions are completely secure. You do not need to give any personal information to send a Bitcoin transaction. You need only enter the wallet address of the receiver and specify the amount. No numbers, names, or any other private information that people can steal. Nobody but you can spend your Bitcoin from your private secure wallet. You can complete a Bitcoin transaction online with somebody looking over your shoulder and still not worry about security.
Paper and metal money undergo a tremendous amount of wear and tear on a daily basis. A paper bill takes a beating just from being in a wallet. It gets folded and creased possibly dozens of times a day. Metal coins are more durable but still can corrode. Perhaps the biggest problems with coins is that they are a waste of resources and can be quite a nuisance. Carrying change in your pocket or car is flat out annoying. Coins can be lost or even thrown away before they ever get spent.
Bitcoin is electronic. There is no wear on a Bitcoin. They will always be usable. We will not have to use taxpayer money to put infrastructure in place to replace or repair it. It will never get lost. All small amounts will remain in the wallet. There is no change to keep track of and we can divert all the resources dedicated to designing, minting, and replacing our current currency to other much-needed areas of our government.
We do not know exactly how many dollars are in existence. We don’t know where they are located. We don’t know when our government moves large sums to obscure locations. We know very little about our money supply.
Cryptocurrency can enable us to understand more about our money supply. We will be able to tell exactly how much of our currency exists and where it is concentrated. Complete anonymity is possible with crypto, but we will still know if large amounts are being hoarded or accumulated with the purpose of manipulation. This is something that we desperately need in a time where there is very little distrust in our government and the massively wealthy.
Digital currency is not the only application for blockchain technology. There are so many industries that can be helped with this technology and we are just barely scratching the surface of the potential for this revolution. As always, if you have questions or comments on anything I’ve written or you’re looking for a place to start, feel free to DM me on whichever social media platform you desire.