Bitcoin was invented in 2008, right after the severe worldwide economic crisis which initiated after the collapse of the world’s second biggest financial services firm, the Lehman Brothers.
The main idea behind the birth of the first cryptocurrency was the creation of a new economic unit which was immune to the plethora of unsolved problems that the current system has.
In a nutshell, with Bitcoin you’ll be able to conduct safe, secure and easy financial transactions without having an intermediar (bank or online payments companies like PayPal) interfering with your business.
Bitcoin was a riposte towards the current social and financial system which gave ordinary people the opportunity to level up their society transparency and fairness!
With all that being said, it’s no wonder that the crypto market has grown so rapidly in the last few years.
Through this post you are going to read and understand what are the main advantages that cryptocurrency has brought to the table which are;
- Decentralization
- There are no transaction fees
- Cryptocurrencies are immune to inflation
- Cryptocurrency is not restrained by national borders
- Transactions can happen 24/7
Disclaimer: Cryptocurrency market is still growing and despite its potential it still needs to overcome some barriers.
The biggest barrier of them all is its environmental impact, a topic that if you want to learn more you should click here.
Decentralization
Among the benefits of cryptocurrency the most renowned if anything is the decentralization.
At the same time, decentralization is the number one ingredient of innovation that cryptocurrency has brought into our lives!
What does it mean for a currency to operate in a decentralized system?
“Decentralization is when financial transactions do not rely on a central point of control in order to stay accurate, reliable and trustworthy. Instead, they retain their reliability by keeping the total amount of entries in multiple points (servers). As a result, when a person conducts a transaction it is registered simultaneously in multiple servers while it remains completely secure and anonymous”
In order for somebody to better understand the whole concept of decentralization we should proceed immediately to the advantages;
- The absence of centralized authority equals that nobody can monitor financial transactions. Consequently, ordinary people are finally in position to enjoy freedom while buying and selling products.
- In addition, no central authority means that there is no one there to impose taxes on financial transactions while they happen. I think there is no need to say more at this point.
- Decentralized financial transactions are secure and it is extremely difficult for malicious softwares and hackers to access or interfere with because they can’t control the entire system, like it happens with centralized systems.
Are you already feeling in love with cryptocurrency?
Just wait because there is more!
No banking fees
Another lovely advantage that users of cryptocurrency enjoy is the fact that there are no transaction fees as it happens with banks or other online payments companies.
This doesn’t mean that with cryptocurrency there are no functional fees but they are extremely low.
The best example to illustrate how big is this specific benefit offered by cryptocurrencies is the El Salvador’s example;
- In September 2021, El Salvador became the first country in the world to adopt Bitcoin as legal tender.
- A major reason behind this move was that many Salvadorans live outside their country and mostly in the US.That means that they have to pay banking fees to send and receive remittances.
- These fees are exactly what the Salvadoran government tried to minimize by adopting Bitcoin.
- And those fees are a lot of money if somebody thought that remittances that are sent to their country makes up 22% of El Salvador’s GDP
Protection from inflation
Inflation is among the biggest problems the current financial system encounters.
In a nutshell, inflation occurs when central banks and governments print and distribute more money in the markets while the total product supply remains the same.
As a result the prices of all the products rise, meaning that with the passage of the years you can buy less things with the same amount of money.
In the case of cryptocurrency, almost all virtual coins are distributed with standard circulation supplies meaning that they remain immune to inflation.
For example, Bitcoin’s circulating supply is 21,000,000 and there is no possibility to become more.
The only way for the circulating supply to change is to be reduced but in this case we are talking about deflation which is the exact opposite.
Cryptocurrency has no borders
Cryptocurrencies are not affected by national borders.
It makes it easy for an individual in a country to send money to somebody in a different country!
One amazing example of that benefit it would be the country of Afghanistan:
After the abrupt US withdrawal by the country, the Afghans faced nationwide cash shortage, closed borders, a plunging currency, and rapidly rising prices of basic goods.
People who managed to leave the country faced the problem of what to do with their money while leaving.
It turned out that the best option for them was to convert their money into cryptocurrency and safely use it in their new country!
Transactions can happen anytime
Stock markets are only open 5 days a week.
Most traditional financial markets are not open for business during nights, weekends or holidays.
On the contrary, in the cryptocurrency markets you can actually trade anytime you want.
Conclusion
Until today the prospect of crypto is still unknown. The benefits of crypto have brought to the world a new way of doing many things better. From decentralization to inflation cryptos promise a whole new economic environment that we are about to witness within the upcoming years.
