In this jet age, an age of unprecedented advancements in science and technology, cryptocurrencies are one of the most talked-about advancements, yet, one of the most controversial as well.
Cryptocurrencies could be seen by many as a store of wealth, you hear things like this from some friends:
Take your money off the bank, buy so and so coin, leave it there for some time, and watch your money grow.
Really? Sound's quite intelligent and somewhat too good to be true; as a result, most people may wonder, which is a better value, physical money or crypto money?
In this edition of the @Hive-learners weekly featured content, I will be giving my opinion on this issue, and as usual, this is not a piece of financial advice, just my humble opinion.
Are Cryptocurrencies Digital Money?
To begin with, let me start by clearing off some specks of dust and a bit of misconception in terminologies.
Cryptocurrencies are digital money; but not all digital money are cryptocurrencies.
@zestimony
This is a very important point to note in this digital age. Digital currencies can come in many forms, and cryptocurrencies are one of them. Cryptocurrencies are unique because of the technology on which they are based, which is commonly called cryptography, and how transactions that are done on them are stored a processed through a publicly available ledger system/database known today as the blockchain. Cryptocurrencies are usually decentralized in nature note the word - usually .
Digital currencies exist in other forms other than cryptocurrencies. A very common form of this is the Central Bank Digital Currencies (CBDCs, for Nigerians, you can take your mind back to the e-naira project that gloriously failed). These currencies are more akin to paper money, as they are just the digital copy of your notes. Any item that stores monetary value in a digital form including things like gift cards, website tokens, money available on your bank apps, and more may be considered a digital currency. One unique feature of digital currencies other than cryptocurrencies is the fact that they are all centralized.
So, with that out of the way, my focus will be on digital currencies in terms of cryptocurrencies and not including other digital currencies like CBDCs.
My Preference for Money: Crypto or Paper cash
Currently, I go with both, though one seems to have a more prominent place in my daily activities than the other, and I am sure you guessed right - paper money; while the other has a significant role to play in my financial status in the nearest future.
Making a Case for Physical Money
Crypto came to change the world and remove power and control from a centralized body, a move that has been fought against by numerous governments and financial bodies. So, basically, cryptocurrency is good for me as an individual but bad for the government and her established financial institutions. So, for this reason, crypto adoption has been very low and in some places, using crypto could be considered a crime, so, paper money just has to stay.
Making a Case for Cryptocurrencies
Cryptocurrencies have had a very high economic impact on me. While the term economic impact may cover both positives (profits) and negatives (losses) which crypto has been, I will dwell mostly on the positives.
For me, cryptocurrencies are one of the best ways I have discovered to store valuable financial assets. While you can store wealth with any cryptocurrency, the high volatility of cryptocurrencies, in general, spurred me to use only stablecoins for this purpose. So, most of my savings are held as stablecoins and my paper cash wallet is hardly more than an equivalent of $20 daily, and my bank is the same.
Cryptocurrencies are just fluid and open up more opportunities to profit from your savings than the traditional banking system does. I am currently eying the opportunity to invest pHBD-USDC on the Polygon network. The profits promised per annum in whole and in part are basically unmatched by any form of savings achievable through paper money or storing money in a digital form in traditional banks.
Unlike the physical money in which their is either a logical/practical limit to how much one can hold, or a limit placed by the financial systems on how much one can hold, with crypto, there are no limits.
Final Words
It is difficult to pick between the two types of money. Each has a vital role to perform in our lives. In a world where cryptocurrency adoption has been slow, particularly in some nations, we must rely on conventional money for day-to-day transactions. However, in a world where banking systems and governments make it difficult to accumulate wealth, we rely on cryptocurrencies for wealth creation and storage.
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