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Why do Cryptocurrency and Blockchain Matter?

July 22, 2020

Cryptocurrencies gain more and more popularity over time. Since the past years when nobody heard about Bitcoin and Ethereum digital currencies turned into the resources that are used for payment operations along with the traditional fiat currencies. Nowadays there are 5,737 cryptocurrencies and this number is constantly growing. 

With the emergence of digital currencies and blockchain, things have radically changed not only for traditional payment methods but also for applications, smart contracts, privacy issues, security, and the transfer of information without involving third parties. Blockchain has influenced a lot of things that surround us in different fields. And this is just the beginning. 

First of all, digital currencies have great potential to change the financial sphere significantly. According to the predictions of the experts, even one of the 5,737 virtual assets can replace the fiat money.

This leads to the situation when the central banks and other financial institutions would lose their power as the mediators between the customers and the government. The owners of private banks are likely to lose a lot of profit. Also, cryptocurrencies can solve the problem of inflation – this phenomenon would just disappear. Moreover, the banks would no longer print money and add zeros to bank accounts. Due to these predictions, it expected that the algorithm would be in charge of the whole financial system instead of the most powerful.

The Importance of Blockchain
The Importance of Blockchain

Let us recall the list of things that are expected to change the world. This range includes:

  • blockchain;
  • privacy;
  • security;
  • smart contracts;
  • getting rid of a mediator.
World Net
World Net

The above-listed points can be achieved with the help of various blockchains. The cryptocurrencies will become easily accessible due to the wide range of providers. The technologies will become an obstacle for the major players.

Digital currencies are expected to influence the value of traditional money, especially unbacked currencies. The total sum of money that will be replaced with digital currencies is estimated at trillions of dollars. Some experts even evaluate this amount at $1.2 quadrillion. However, according to the other predictions, cryptocurrency will be commoditized but the value will be lesser.

The wages in the United States decreased in the year 1971. After this period the government of the U.S. began to inflate the money supply and spend these funds without the need to raise taxes. The increase in the money supply led to the tendency when the government spends more costs while making people work harder. If to compare the state of affairs in the past and the current situation, we will find out that some time ago the one worker per household was enough to earn the money needed for living. However, nowadays there are cases when two earners per household are not enough to make ends meet.

Due to this reason, digital currencies have the ability to decrease the “money power” worldwide. The money power implies the banks and other financial institutions, central banks of the governments and people who are at the forefront of these organizations. 

When the governments began to issue the unbacked money, the money power increased and led to the asset bubbles and irrational spending of the money by the government. Digital currencies can solve the problem of over-taxation and central banks, so we may say that cryptocurrencies have the capability to change society and the world around us.

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