How Cryptocurrency Is Shaping the Future of Payments

Money creates a sense of security: it shows us a way to accomplish our dreams, and therefore most of us end up spending half of a lifetime chasing money to pay bills, make a living and meet our needs. Money not only helps us to accomplish our dreams - it’s also an instrument of destruction and is often associated with greed, lies and criminality. Money is the champion of good and bad, and, to many, it still remains a mystery. It’s a fact that regular currencies today are not backed up by anything but our own beliefs and central banks, globally, are holding our future in their hands with a tight grip. The financial crisis in 2008 almost brought down the world’s financial system. Central bankers and other regulators bear responsibility for mishandling the crisis. Many people and companies went bankrupt overnight, but, at the same time, great opportunities were also born. Out of the crisis of 2008, Cryptocurrency was born out of years of frustration and distrust with their banking and monetary system. As the Group CEO of Monspace Multinational Corp, Dato Sri Jessy Lai points out: “Digital currencies differed from electronic money on the whole by departing from a centrally issued and administered model, and in most cases by creating value based on utility, scarcity, security etc. rather than a fixed conversion rate against Fiat currency – as is the case for e-money”.

What is Cryptocurrency?

Bitcoin blockchain was written in 2008 and, despite criticism by financial regulators institutions governments and media, it increased in value tremendously. Between 2009 and 2013, the value of a single coin went from 0.1 US dollars to over 1,100 US dollars. People who had invested in Bitcoin became multimillionaires over a very short period of time, and it’s probably one of the most-discussed economic successes in financial history. One of those multimillionaires was a young Norwegian man who invested 26 US dollars only to forget all about it; a couple of years later, his modest investment of 26 US dollars had turned into over 850,000 US dollars. It was an expensive lesson for anyone who was introduced to Bitcoin at an early stage but turned it down.

What if new technology allows everyone in the world to be their own bank, free from taxes and fees? Cryptocurrency is built on math, technological computer software with a shared code that connects a global network through the Internet. But how do we know Cryptocurrency can be trusted? Traditionally, we are programmed to rely on trusted third parties like banks, credit card companies and remitted services as they keep track of the money being transferred from one to another, and we are heavily charged for this service. We are in the habit of paying lots of money for something that could be free of charge; and most people have blind trust in banks.

But what if there are ways to cut out these middlemen charging us huge amounts of money that are cheaper safer and faster? Today, you can easily copy and download music and movies online, and Cryptocurrency is digital, just like music and movies on the Internet. Now, can you trust that your digital money will not be downloaded as easily as your favorite songs? How can a digital currency retain its value and not be copied online? The interesting thing is that Cryptocurrency is not a file on the computer; it is an entry in the publicly-distributed database called blockchain. Let’s compare it to today’s banks: they keep ledgers of each transaction with a plus and a minus in databases. With Cryptocurrency, bank accounts are replaced by an e-wallet where you alone can control it; the ledger of a Cryptocurrency is the blockchain. The blockchain keeps a record of every coin and every transaction ever made. And it always balances, since the amount of coins is unchangeable and no coin will ever leave the system.

The future of payments

When one coin is sent somewhere, what is really being sent is the control of the database with a code that is a unique key for that specific transaction. As transactions are made, the ledger, the blockchain, is constantly synchronized across the globe. Each user on the entire network has an identical copy and since the blockchain is public, it cannot be controlled by any single person. There is no point of failure to hack the blockchain; hackers would have to target thousands of computers across multiple geographic locations all at the same time. Hacking may not be impossible, but it is made much more difficult and Cryptocurrency is more secure than the present banking system. The whole system has the potential to replace banks and bankers worldwide. Many people are happy with the system we have today simply because they don’t understand it or because they cannot grasp the amount of money we pay our current financial system in fees on a yearly basis. Cryptocurrency is the total opposite of the banking system today as it is completely transparent and no one can change either the amount of coins or the mathematical rules dictating the creation after the mining has started.

Bitcoin was a tremendous breakthrough and put Cryptocurrency on the map, but the pioneer soon showed that there was plenty of room for improvement. “We already know that people are using less physical cash and that this trend is only going to continue. The fact is that cashless card and smartphone payments are on the rise, especially throughout Europe. The level of investment being made to meet customers and their higher expectation level means we know what will happen” (souce). New cryptocurrencies were developed and awareness of the new economic system grew rapidly, opening doors for a much safer, more powerful and user-friendly Cryptocurrency.

The demand of Cryptocurrency today is very high, mainly because of the simplicity of the concept, but also because people are discovering all the benefits and the security one coin of Cryptocurrency can give them. Since the value of Cryptocurrency is based on supply and demand, it’s easy to understand that with a growing network, the value is increasing. This new way to remit payments is spreading around the globe, gaining ground of hundreds of thousands of miners, traders, and users rapidly adapting to this new market. The current monetary system we know today is going through tremendous changes globally and we are moving into a new era.