There have been series of discussions among currency traders, consigning the fiat currency and cryptocurrency. And their market values.
A lot of people believe the fact that cryptocurrency has come to stay; truly, it has.
Considering the fact that human interactions, since ages, were basically modified through series of evolutions. And also since 2009, after the introduction of BITCOIN; Cryptocurrency has gained much popularity and relevance in the global market. However, bitcoin being the leader, has appreciated about seven thousand times more than the US dollar, which means it could be seen as a virtual asset.
The fiat currency, by definition is a government based currency (money) that is officially declared as legal tender. Meaning that it could serve as a medium of exchange.
The term fiat is Latin derivative, meaning "let it be done". According to history the idea of using something lightweight and durable as means of payment was first initiated in China during the Han Dynasty, which was made of leather (118 BC).
Subsequently, in 1661, Europe (precisely, Sweden) adopted this concept of banknotes and was greatly used by travelers like Marco Polo during the 13th century.
Since the interactions of man and the evolution of money, man has however, continually sought for better ways to facilitate trade, in aspect of payments.
In the early days, human existence and interactions were basically primitive. There wasn't a generally accepted medium of exchange, doing business then was a big problem. People had to exchange their goods or services, directly, for other merchandise with out value equivalence.
Barter trading was highly inefficient because the goods and services exchanged varied in quality and quantity, also buyers and sellers differ in their needs. However, these inefficiency gave birth to commodity money.
A commodity is any basic product either, in raw material or agricultural produce that we make use of almost on daily basis.
Therefore, a commodity money is any commodity that is valued by the people and is generally used as a medium of exchange.
In those days salt, tobacco, coffee, etc where use for trading due to there intrinsic values. Just like the barter; the commodity monetary system was full of inconveniences, thus, it also failed.
The discovery of precious metals made another history in the world's monetary system.
Gold and silver were the first metals used in coinage. Their beauty, rarity, immunity to corrosion and economic values lead to there adoption as a medium of exchange. For centuries, minting of gold and silver were prevalent. Many countries used gold as the highly valued coin, while silver and copper were used as lesser coins.
The origin of paper money started in the middle age, when trading with gold and silver coins became so rampant. At a time traders began to keep their values with goldsmiths, while in return they obtain a written receipt as guaranty. With time these receipts became acceptable as a means of payment, circulating from one hand to the other.
In 1810 a bank in Brazil, Banco do Brasil, issued her first bank note, its value was hand written just as we do today with our bank's cheque.
Cryptocurrency, our 21th century!
Here I'm going to talk about the most essential thing we need to know about Cryptocurrency (precisely on Bitcoin). If you can read through, believe me you'll know more, than any other person.
Basically, Cryptocurrency is a virtual or digital asset that is designed to be used globally as a medium of exchange without facing governmental barriers.
Bitcoin being the first and highly recognized currency, was created by an unknown person or group of people using the name, Satoshi Nakamoto. The algorithm was released in early January 2009 as an open-source. Recently, Cryptocurrencies apparently became a global phenomenon.
As about 2016 /17 you'll hardly find a; financial institution, prominent accounting firm, big research organization or a government that did not research Cryptocurrencies.
"virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others and confused a heck out of us." -Thomas Carpet, US-Senator.
Here is the most interesting part of the whole thing, the unknown inventor of Bitcoin never intended to develop a currency. In his announcement in 2009, Nakamoto only tried to build a peer-to-peer electronic cash system.
"Announcing the first release of Bitcoin, a new electronic cash system that uses peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority -Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge."
Nevertheless, his vision gave birth to Cryptocurrency.
Another question that comes to mind may be; What is Blockchain?
Blackchain is a transparent and non manipulated technology that keeps account of every financial transactions.
For authoritative explanations:
Don & Alex Tapscott, authors of Blockchain Revolution (2016), explains;
"The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value."
Because of the fact that Cryptocurrencies involve a technical mathematical computations, the blockchain is designed to monitor transactions in order to avoid unnecessary errors.
"As revolutionary as it may sounds, Blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not with the consent of the parties involved. Above anything else, the most critical area where Blockchain helps is to guarantee the validity of transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected though a secure validation mechanism."
Ian Khan, TEDx Speaker | Author, Technology Futurist.
Most people question the authority backing Cryptocurrencies but, here is the thing; fiat money as we'll know is a centralized currency, which means it is controlled by the particular government that issues the bill. Cryptocurrency on the other hand is a decentralized currency that is based on consensus, and has no boundary limits. Which means, it could be used to make certain purchases across the globe.
Most Cryptocurrencies restrain the supply of the tokens. This control in the supply of tokens is achieved through a schedule written in the code. Which means the monetary supply of most Cryptocurrencies in every given moments can roughly be calculated.
Therefore, when ever I'm asked if Cryptocurrency is the money of the future. l always answer, "yes! Cryptocurrency has come to stay, you can tryout with a spare money."
Do you still doubt the possibility?
You can checkout these:
"In the next few years, we are going to see national governments take large steps towards instituting a cashless society where people transact using a centralised digital currency. Simultaneously, the decentralized Cryptocurrencies, that some even view as harder money, will see increased use from all sectors." -Caleb Chen |
London Trust Media.
Finally, Sarah Granger, author and Speaker, while speaking in an interview stated;
"While it's still fairly new and unstable relative to gold standard, Cryptocurrency is definitely gaining transactions and will most certainly have more normalized uses in the next few years. Right now, in particular, it's increasing in popularity with the postelection market uncertainty. The key will be in making it easy for large-scale adoption (as with anything involving crypto) including safeguarding and protections for buyers/investors. I expect that within two years, we'll be in a place where people can shove their money under the virtual mattress through Cryptocurrency, and they'll know that everywhere they go, that money will be there."
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