Cryptocurrency is definitely the most commonly used term when it comes to investments in blockchain technology.
Briefly about the term currency
Initially, cryptocurrency is really a poorly formulated term for the merits it includes. This is about the definition of ‘currency’ and what you really mean when using this word. The word currency comes from the Latin currens with the meaning ‘in circulation’. Both words refer to a value that is in use.
The three main characteristics of the currency is as follows:
- Currency should have a (stable) price or value
- Currency should be in circulation
- Currency should be used
If we take a look at the cryptocurrency with these three attributes, or the criteria, in mind, it’s easy to see why it’s a pretty inappropriate term. In any case, such cryptocurrency is used today. Today, cryptocurrencies are mainly used as investment units, and not utilities.
We can compare this with someone who uses their money against someone who has their money standing on account. For example, what would happen with the American economy if no one was willing to use their US Dollar?
The idea behind cryptocurrency is that it should be used as a value within a system. That is, it has a value that is in circulation. But this is not the case today. Few owners of cryptocurrency actually spends them; Most investors buy and sell units in large lumps. Therefore, the word crypto stocks or crypto units had probably been more appropriate.
Digital and unregulated values
Cryptocurrencies are digital values. They are generally not accepted as a form of payment and cannot be exchanged for goods in real life and transactions can be quite unstable. This latter property can be explained by the fact that the cryptocurrency is not regulated by a central authority; The units are decentralized by nature. Because of this, nobody is there to control and maintain the stability of the price.
The instability makes it challenging to implement cryptocurrency in the financial systems we are used to. Imagine that the salary you received today was worth half or twice as much just a few hours after you received it. This is the reality of cryptocurrency today; It is quite common with significant price fluctuations in a very short period of time.
In that sense, cryptocurrencies are not real money yet, at least not in the correct meaning of the term. They are unstable values that work within their specific financial ecosystems. As an investor, you can probably both lose and earn money on them. But for a regular consumer, they are too turbulent to be used in everyday life.
In addition, there are no systems for trading with cryptocurrencies yet; in any case not extensive. You can come across online stores that accept Bitcoin, yes. But it’s still a while until Walmart or your local coffee shop start accepting cryptocurrency as payment.
There is a way to bypass this though, and that is by using cryptocurrency-debit cards. Companies like Monaco offers a debit card that where you can spend cryptocurrency by directly exchanging crypto to fiat when you buy something.
The ideology behind cryptocurrency
Cryptocurrency definitely has the potential to make a lot of positive changes. For example, if they are stabilized, they will be able to make a significant contribution to balancing economic differences worldwide. When a value is not controlled by any central power, one can counteract both inflation and economic corruption.
The challenge is that as long as everyone uses cryptocurrency to make themselves rich, they do not actually use crypto. Then, cryptocurrencies will be investment objects, instead of real transaction units, which are static. In that case, it will also be completely impossible for us to replace traditional currencies as we know them today.
However, the ideology behind cryptocurrency is that they should be able to function as decentralized values one day. It’s a long time before this becomes a reality, but the blockchain technology that supports the cryptocurrency definitely has the potential to revolutionize a number of market sectors. If you find solutions that stabilize the cryptocurrency, there will be no way in the way that the devices can eventually replace traditional currencies.
In summary: Cryptocurrencies are digital and unregulated assets that are unstable and generally used as investment objects instead of transaction units. The currencies are supported by the blockchain and can be used within their specific platforms.