In this ICO madness, where we are now, we often forget why we chose cryptocurrencies to be our long-term investments in the first place. With this never-ending stream of low-quality advice from popular YouTube channels about investing into shitcoins, let’s remind ourselves about the general advantages of CryptoCurrencies. While remembering the main advantages, we also should cover the main problems in the cryptocurrency ecosystem. It is especially important to talk about, considering how hard it was for Bitcoin to implement the first scalability solution, Segregated Witness. What if the Ethereum network will have another split due to the adoption of Proof-of-Stake protocol, which will dramatically change the importance of miners in the Ethereum ecosystem.
I understand that many people are simply looking for easy money, but we, the CryptoCurrency and Ethereum maximalists are, first of all, seeing great potential in the blockchain technology. We see that smart contracts are able to be the new step in the evolution of economic decentralization, which has been happening since the late 20th century. We see that CryptoCurrencies can become the new money with no inflation, borders or limits.
The future in the hands of believers and not profit-seeking short-term investors. This is the new era of true economic freedom if you haven’t noticed.
I want to begin by saying that this list is incomplete, I simply wanted to cover the most visible advantages of cryptocurrencies. If you have something to add to this list, I await your comment under the video or my blog post.
Cryptos have several major advantages over central banks’ currencies or popular financial and physical assets.
The reason? CryptoCurrencies solve a lot of the problems which are connected to centralized nature of assets/currencies. Let’s enumerate them.
Inflation is almost non-existent in the cryptoworld, but it still exists to financially incentivize the production of blocks. The adoption of Proof-of-Stake protocol will further decrease inflation and make cryptocurrencies even more valuable (the Ethereum network will adopt hybrid POW/POS at the end of 2017). The most important part here is that the inflation is known, this number is not hidden by anyone. In case of central banks, the inflation rate is not known, the banks irresponsibly print a lot of fiat without general population approval. This is one of the major reasons true believers are hyped about cryptocurrencies.
There are absolutely no boundaries when we talk about transfer of value. You may be geographically in Thailand, but you can work for the company in United States. Sometimes, it is real pain in the ass to get that money transfer from another country. Problem no more, cryptocurrencies do not recognize the concept of borders, and they can be transferred from point A to point B in a matter of seconds.
Another great point is transparency. You cannot cheat the system without letting others know about that. This is why Bitcoin or Ethereum had their rough days with someone exploiting the loopholes, but due to the fact that everyone could see what was happening, the loopholes were closed in a short period of time with the determination of community and developers.
When you have to send money to someone from another country you will finally realize why cryptocurrencies are the winners here. It is not only expensive to send money, but you also have to put a lot of effort into filling all the necessary papers for it.
In comparison to SWIFT/SEPA, the transaction time is fast as a lightning strike. I know that the cryptocurrency community is not very close to VISA transfer speed, but the crypto community is actively working on solving the problem.
Finally, nobody can block or freeze your wallet in the cryptocurrency world. Well, maybe only if you hacked DAO last year, but that is the only example I know of. If you have something else to say here, I will appreciate your comment.
Where does value come from in the cryptocurrency world?
Firstly, some cryptocurrencies are recognized and valued as assets. For example, Bitcoin is considered to be the gold of blockchains. It is thought to be highly profitable storage of value.
Secondly, the currency value. We all know that even central banks’ currencies have capitalizations. It can be computed by summarizing all the fiat in circulation. And cryptocurrencies will soon absorb this. Mark my words and thank me in 3 years ( I will be happy if you will really do this ).
But enough with advantages, let’s finally discuss the problems of the ecosystem.
I want to start by saying that the main problems of CryptoCurrencies can be overcome by improving the codebase and the legalization.
Scalability problems really exist. And they need to be overcome in order to bring more users into the ecosystem. And this problem is already addressed by developers with the coming lightning networks/sharding/staking. There are no unsolvable problems in our day and age.
Legalization of CryptoCurrencies is happening across the developed and developing nations. Even the most conservative countries like Russia are working on bringing this market out of the shadows. Right now, the most advanced countries in this matter are Singapore and Switzerland.
Changing protocol is a very lengthy and complex procedure, but eventually the protocol is improved through community efforts. Even Bitcoin finally got its Segregated Witness activated.
Price volatility is a normal process of the appearance of a new asset class. Especially the one which will change the world as we see it. Price change will reflect how adopted the technology is. I am a believer, but the market cap in 2020 will surely exceed current numbers.
Adoption is not one-day thing. It still will take a lot of time, but the ecosystem attracts more people each year. And that’s why I am happy.
Hacks can and will inevitable happen, but that’s why blockchains are always updated to address possible attacks. Even Bitcoin had its moment when hacked got billions of new bitcoins mined, but that can and will be fixed by the community.