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The purpose and need of cryptocurrencies

Introduction

There is a group of people who doubt about the use of cryptocurrencies because of various misconceptions they have about digital currencies. One should understand the operation, purpose and necessity of cryptocurrencies before reaching any kind of conclusion.

Cryptocurrencies emerged with the creation of Bitcoin. After Bitcoin many other cryptocurrencies have appeared, and many others will come over time as the Jillion, for example. Ethereum, Litecoin, Ripple, Tether, EOS, Bitcash are some of the largest cryptocurrencies in terms of market capitalization. All these digital currencies have been inspired by Bitcoin and have even corrected some of the weaknesses of Bitcoin (process time, energy needed for mining etc.).

 

Why cryptocurrencies?

Bitcoin pioneer Satoshi Nakamoto briefly mentioned the reason for the creation of Bitcoin in the genesis block (the first block of the network) of the Bitcoin blockchain. Bitcoin appears on the market just after the 2008-09 financial crisis breaks out. That recession was caused by the collapse of many banks because of their huge portfolio of toxic assets.

A recession has an impact on the country's currency and even global currencies. To combat it, decisions are made at the government level that unilaterally change the value of the currency. This brings us to the main reason for developing cryptocurrencies. Satosi Nakamoto (or those behind this character) mention that their fundamental purpose was to remove control of central banks and governments over money while avoiding inflationary movements to maintain the real purchasing value of money. Cryptocurrencies are not restricted to a country, they are universal. A global currency solves many of the problems that exist with the use of conventional currencies (fiat).

 

The need for cryptocurrencies

Cryptocurrencies have a wide range of features that make them an appropriate form of exchange medium when compared to fiat currencies. Let's look at some points below that emphasize the need for cryptocurrency.

 

Timestamps:

Cryptocurrencies have timestamps on every transaction we make. Timestamps make it easier to know transaction history, which would be useful in case of double-spending issues with digital assets.

Universal:

We can use and transfer Bitcoin universally in no time. Transaction fees are very much to traditional bank transfers. Using our debit or credit cards internationally is often complicated with strong transaction fees. With the emergence of Bitcoin debit cards and Bitcoin ATMs it is easy to transact anywhere in the world.

 

Anonymity:

Payments and exchanges with cryptocurrencies use only wallet addresses, maintaining the anonymity of users who transact. Bitcoin allows only transactions to be pseudonymous, but there are cryptocurrencies like Monero where transactions are totally anonymous.

 

Atomic Swaps:

We can exchange one cryptocurrency for another without the need for exchange houses or third parties.

 

Difficult to counterfeit:

The euro or dollar banknotes we use today are relatively easy to counterfeit. But counterfeiting cryptocurrencies is an impossible task today. Since it is digital currency registered on the distributed blockchain, so it is not possible to counterfeit them.

 

Final words

As time progresses, we continue to develop current technology to ensure the comfort of our lives. As we get used to today's technology, we begin to find errors and failures. That's why we're trying to modify that technology to improve it, or we devised another all-new technology to replace the old one that fits our current needs. Thus, cryptocurrencies have been developed to overcome the difficulties we face today with fiat currencies.

This article only tries to help you understand the need for cryptocurrencies in an interconnected world in which the banking and government sector has maintained a monopoly, taking action and generating costs to the detriment of citizens.

 

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