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A cryptocurrency, cryptocurrency, or crypto is a collection of binary data that is intended to function as a medium of exchange. Individual coin ownership records are stored in a ledger, which is a computerized database that uses strong cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership.
Cryptocurrency does not exist in physical form (like paper money) and is not typically issued by a central authority. Cryptocurrencies, as opposed to central bank digital currencies, typically use decentralized control (CBDC).
Money is what money does. Prof. FA Walker’s definition of money is perhaps the most straightforward. To overcome the limitations of the barter system, money was created. It was created to meet specific needs and has been constantly evolving since then. The same is true for cryptocurrency. The first cryptocurrency, Bitcoin, appeared on the horizon in 2009, sparking the development of several cryptos over the years. The global crypto industry now has a market capitalization of more than $2.5 trillion.
As cryptocurrency adoption spreads rapidly around the world, the big question on everyone’s mind is whether a cryptocurrency will be the future of money.
Using cryptocurrency to compare to money
Money serves specific functions in an economy. It is intended to serve as a medium of exchange, a unit of value, and a means of storing value.
Prior to the invention of money, humans relied on the barter system as a means of exchange. Individuals bartered commodities with one another. A farmer bartered his produce, such as grains, fruits, or vegetables, for products or services that he could not produce. However, the barter system has a significant limitation. How should the value of two different commodities be defined? As a result, a common denominator, money, was invented. Let’s take a look at cryptocurrency right now. Although it cannot be forced to be accepted as legal tender in the same way that dollars, pounds, or rupees can, crypto is still accepted by some major companies, including Tesla.
Money’s ability to fix the value of goods and services is another important function. Because of its high volatility, cryptocurrency is still not considered for this. Assume you paid a certain amount of cryptocurrency to purchase a product, and the value of cryptocurrency skyrockets the next day. You end up losing a significant amount of money. Money should not be allowed to fluctuate to extremes. The issue right now is that crypto is only used by a few people. Small changes made by a few people cause larger fluctuations. However, as more people enter the crypto market and crypto stabilizes, things are likely to change.
Store of Value: If you have money, you can keep it and use it later. Crypto, in a way, serves this function as well. However, the large-scale fluctuation is once again a cause for concern. However, experts believe that as the cryptocurrency market expands, it will become a profitable investment option.
The current state of cryptocurrency as money
Despite the numerous challenges, cryptocurrency is already being used as currency, albeit on a small scale. PayPal’s mobile app now includes cryptocurrency features. PayPal’s users can use digital currencies such as Bitcoin and Ethereum. El Salvador became the first country to recognize Bitcoin as legal tender earlier this year, giving the cryptocurrency a boost. Malta is working to integrate cryptocurrency into mainstream usage. The Rug Republic, a home decor company in India, has also added cryptocurrency as a payment option. All of these examples demonstrate that cryptocurrency is gradually making its way into everyday transactions.
The path ahead
As I mentioned at the outset, the concept of money is constantly evolving.
There was a time when money was only available in physical form, but we can’t imagine a world without digital payments. As a result, it should come as no surprise that cryptocurrencies will be used as money at some point in the future. You will be able to use cryptos to buy a coffee or pay for a cab ride. It only appears to be a matter of time!
It is not necessary to wait for the cryptocurrency to function as money. You can begin trading in cryptos right away on a secure and dependable platform like ZebPay. So get started and start your cryptocurrency journey.