Our one shot to a fairer, more connected society. I want to explain why “cryptocurrency” is one of the best things to happen to humanity as the implications are enormous. Buckle up, it’s a hefty article.
“I think this Bitcoin fad is stupid and wish it would crash back to zero. It has no value!”
I’ve heard this all too many times. You might feel like this right now, and that’s ok. One can not like cryptocurrencies for several reasons; Some waste huge amounts of energy, they’re used in plenty of illegal activities and sure… you can look at many starting coins as a giant ponzi scheme.
So what’s the point of ‘digital money’ when we already have our secured bank accounts with credit/debit cards, bills and PayPal accounts… making our lives easy?
The solution for problems I hope you never encounter
Technology serves a purpose. Most people don’t care how their smartphone or the internet works, as long as they can benefit from what it does for them. So I’ll skip the whole ‘what’s a blockchain’ part. To put it simply:
A cryptocurrency’s purpose is to enable someone to become their own bank.
Basically it allows one to no longer depend on any institution to store value and send it from one place to another on the planet. It seems simple yet the implications are mind boggling.
1) Fast and nearly free* (Inter)national payments
I don’t think I have to explain the vast benefits of not having to wait three days or even a week for your international transfer to come through. Not to mention the hefty fees most banks charge for doing just that. This alone is pretty groundbreaking.
Also, forget about getting terrible deals in those shady exchange offices when you land in a foreign country. If people all over the world would accept cryptocurrencies you’d never have to worry about having the right money on you.
(*Some are slower, some are faster. Some require a small fee and some are instant with no fees at all)
2) Financial Inclusion
Over 2 billion people remain unbanked. Financial inclusion is key for reducing poverty. If banks don’t want to give someone an account because they’re considered a ‘cost’ or a ‘liability’, it becomes very hard for said person to participate in the economy. Let alone the global economy.
Cryptocurrency enables people to become part in the global economy and nobody, no border, bank or political power can deny them the right to save, send and receive money worldwide whenever they desire to. No need to put any signatures, be monitored or get the approval of anyone. People can get interests and even loans in DeFi, and nobody can them deny it.
Bear with me and imagine yourself in the following situation where you:
- earn just a few dollars per day.
- live in a developing country.
- are unbanked because the bank refuses you as a client.
- struggle for survival every day.
- see your child feel obligated to leave everything behind and work abroad, to generate some extra income.
This is a very common situation in many developing countries.
Ok, so now it’s pay-day and your child abroad wants to send you some hard earned money. He or she can spare 60 Euros. It will cost them at least 7 Euros to send it to you through the traditional financial institutions like Moneygram or Western Union. Example:
- At the moment of writing the official exchange rate is 64.4 PHP for 1 EURO. Western Union claims it’s just 62.3 PHP on their site
- On top of this they charge a whopping 4.9€ for the transaction.
It comes down to this: The poorest are getting ripped off twice. This is simply outrageous if you consider 7 Euros is worth about 2 days of work for you, the father.
But it gets worse:
Most people working abroad save up to send a large sum at once to avoid
- Multiple 4.9€ transaction costs
- Difficult transportation to the cash deposit/pick-up address.
- The father back home could live far away of a city/bank where they need to receive the sent money. Travel is often difficult and costly.
- Also the child abroad may have to pay expensive bus or train tickets back and forth to a Moneygram or postoffice. (Remember, if you don’t have a bank account or a credit card you can’t do online transactions unless a friend helps you.)
So imagine your son or daughter saves a 1.000 euros over a few months and sends it all at once. She thinks she’s getting a better deal, instead s/he still ends up paying 38 euros because of the dishonest exchange rate.
This happens every day, to millions of people who need every Euro or dollar to advance in life. This is holding back the most vulnerable people worldwide. And the worst part is: they have no alternative! At least they had…
3) Censorship and bank-run resistant
Remember Edward Snowden revealing to the world we were all being spied by the NSA’s PRISM program? Terrible war crime documentation? Leaked tax haven documents and so much more…? If it wasn’t for cryptocurrency, WikiLeaks might not even exist, as they are denied to have a bank account. Lucky for them, they started to accept crypto back in 2010, and now -how ironic- money will probably never be a problem. People can also donate in full anonymity.
Whether you like Wikileaks or not, it’s pretty amazing they can continue doing what they’re doing, and nobody can stop them. Most of us live in relatively free countries, but those less fortunate finally have a way to circumvent dictatorial regimes, borders or families.
In March 2013, the people of Cyprus were no longer able to withdraw over €100 per day because a bank-run was imminent. It’s your own damn money, right? A handful of people or an institution shouldn’t be able to drain or block funds of millions.
Obviously this medal has 2 sides. But anonymous money will always be used for good and evil. Just like freedom of speech.
4) Full transparency… or not
We all know the saying ‘Follow the money’. It is important we can trace large transactions. Don’t get fooled by the media; Bitcoin is actually 100% traceable. Using Bitcoin is the worst idea if you want to do shady things. Every transaction is registered and verified by thousands, is publicly visible and can never be altered or hidden.
However, there are privacy focused coins too. They enable you — just like cash — to leave no trace at all. So you shouldn’t ‘hate all cryptocurrency’ if you don’t like the anonymous ones. The user has a choice, and that’s nice. Privacy can be extremely valuable, even if you have nothing to hide. But that’s another story.
I actually encourage public institutions, like government institutions, political parties, non-profits, NGOs… to use transparant cryptocurrencies to increase their credibility. Nobody likes to see tax money getting wasted, nobody likes donating 100 USD to a disaster fund only to find out less than 3 USD actually found their way to the people in need. I may sound naive, but I think transparancy leads to more fairness.
5) A new movement where nobody and everybody is in charge.
Cryptocurrencies are decentralized. No institution, no military force, nothing can destroy it. It’s a bit like a (Bit)torrent file, as long as 1 person still owns the file (or public ledger), he or she can still rebuild the entire ledger and network. So good luck trying to destroy Bitcoin’s +150.000 nodes spread over the entire planet. On top of that, everything is open source, which means there are no backdoors or malware and hacks are nearly impossible. Next to this:
Nobody and everybody decides what the price is. It’s a global agreement between people. No local war, political conflict or large scale corruption can make the price implode (ref. Venezuela, Zimbabwe…), no-one can manipulate it and no government or central bank can print trillions extra.
However, today we’re still in a speculative phase where fear or optimism can spread like a wildfire. This causes a volatile market. But on the long run, when cryptocurrency reaches a critical adoption rate with extremely high marketcaps, I expect things to ease down. Also keep in mind, it’s mostly the price of Bitcoin versus traditional currency that is so volatile today. The rate of Bitcoin versus ‘altcoins’ like Ethereum or Litecoin lead completely different lives.
The fact remains; today a few people with a lot of money or influence can still manipulate the price. And believe me: a lot of financial institutions and governments worldwide are doing everything in their power to destroy cryptocurrencies from achieving their goals, but lately it seems most of them are taking strong positions in BTC as well.
Occupy Wallstreet on steroids
Perhaps you didn’t know this, but in it’s core Bitcoin started as a kind of new ‘Occupy Wallstreet’ movement to bring the financial powers to their knees and shift it back to the people. In the very first transaction, also known as the ‘Genesis Block‘ of the Bitcoin blockchain there’s an encrypted code which deciphers to this link: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.
Bitcoin was in fact created as a countermovement to the global financial crisis of 2008.
Where the internet brought freedom of information to the world, Bitcoin and the blockchain will bring financial freedom to the world. You’re cutting out the middle man entirely.
6) A safer, cheaper world for merchants
We’re about to enter a more honest world. Scammers don’t stand a chance with cryptocurrency where you can receive, prove and trace back any payment immediately.
I’ll just excerpt/quote the owner of Headphones.com on accepting digital currency ‘Nano’ to clarify:
- We’re not paying any fees and neither are our customers!
- We don’t have to worry about Visa or MasterCard blaming fraud caused by their own lack of security on us. (FYI if your Visa is compromised and you get reimbursed, that’s coming from the merchant — not Visa. Even though it’s Visa that allowed the money to be spent in the first place)
- The point above has given us the freedom to ship products to places we usually would have avoided due to fraud concerns.
Selling goods or services today costs a lot more than you’d think. Did you know:
- Every online transaction with Visa or PayPal costs you (or the merchant) quite a lot of money. 2.5% On a pair of shoes may not seem much, but on a new $1,300 laptop it adds up. With cryptocurrencies we have a chance to 1) cut out the middle man to save on every transaction, 2) Give a little extra profit-breathing-room to small retailers which already struggle in a losing battle to ‘the Amazons’ that can survive on near-zero profit pricewars and 3) serve the unservable (unbanked and people without a valid credit card, people from ‘shady regions’ etc…)
- Most PoS (Point of Sale) terminals also cost quite a lot for the merchant. If I’m not mistaken 1 terminal to accept your cards costs about 80 euro’s per month in rent (I could be mistaken, please merchants let me know in the comments how much you pay). Imagine a large franchise with 10 large stores, each having 5 cash registers; that’s 4,000 euro’s per month just to accepting money. Not to mention certain transactions like Visa can still bring extra fees.
- If ‘their’ service has a hiccup, your business can kiss its revenue goodbye and you’re stuck in a very difficult and costly situation. It doesn’t happen often, but it happens. In Belgium we’ve had major outages by Atos Worldline, like this one, 2 days before Christmas. You can imagine the chaos and lost income.
Another small benefit is that you as consumer can avoid the uncomfortable ‘Sorry sir/madam, your card has been declined’ moment for good. You’ll always know your balance before you spend it and you won’t encounter issues out of your control like mentioned above or like I recently encountered in the Netherlands: I was less than 100 kilometers (+/- 60 miles) away from home, but across a border. For a still unknown reason none of my cards were accepted, even though I had sufficient funds on them (I can check my balance with an app). Luckily I was there with friends who could borrow me the money.
In a nearly cashless society I don’t want my financials to depend on vague decisions or technical outages of services of one organisation. Real decentralized cryptocurrencies have no downtime.
Accept payments the easy way
Have you ever tried to set up a payment system in your (online) shop? It’s quite a (expensive) hassle to say the least.
It is dead-simple to accept crypto on a website or in a store. Just like I accept donations on this site (footer)
This brings opportunities. Especially entrepreneurs who still hesitate to start a business as they can now set up a shop without any kind of bank-account or registration. They can immediately accept payments and serve a worldwide audience for free (or a small transaction fee, based on the used crypto). When their business concept seems to hit the marks, they can take the next steps and accept traditional payments as well.
Less hassle, less investment and less risk required to start a simple business may lead to more businesses everywhere, especially in developing countries.
Again the flip side means scammers can easily generate new stores and ask for your digital money without giving anything in return.
But what about the heavy strain on the environment?
I completely agree. Bitcoin and other ‘mineable’ coins use way too much power and this is completely unsustainable. However, as long as mining these tokens can be profitable, there will be miners and people like Elon Musk are urging miners to use green/renewable energy only for mining, and it seems like they are listening. On top of this the mining keeps said blockchains extra secured and it gives value to the virtual coins. So I hope the hardware gets more efficient to force the energy bills to lower.
There is good news though: Bitcoin is just 1 type of blockchain. Hyper-efficient blockchains also exist which don’t waste any energy at all. It’s entirely up to you to try cryptocurrencies without using Bitcoin. So to say ‘cryptocurrency is bad for the environment’ is just not true. Some coins are, many aren’t.
Better yet: if the world should use these ‘green coins’ we’ll actually end up saving a lot of energy. Compare a green coin to printing and distributing paper money, daily value transports in and out of hundreds of thousands of shops, running thousands of exchange offices, giant bank offices, gold mining operations and transportation of tonnes of gold…
These ‘tulips’ are here to stay
You see there is a lot more to it than a “tulip craze” or “a worthless get-rich-quick ponzi scheme”. Digital currencies do hold value. You may not realize it yet, but then again: how much value does that 10$/10€/… bill in your wallet have? In the end it’s “just a piece of paper” of which billions are printed extra every year. Its value is what people agree on what it’s worth. The same goes for cryptocurrencies, or Star Wars collectibles, or unique sneakers…
I have a feeling I could go on forever here. You may have noticed I’m an optimist when it comes to cryptocurrencies as I truly believe we’ve only scratched the surface of the possibilities. Not to mention the thousands of other solutions blockchain will bring to our world.