What Is Cryptocurrency?
We’re no strangers to the buzz in recent years about cryptocurrencies, but for many of us, the concept of crypto is still difficult to grasp, which leaves us feeling lost and out of the loop. Have no fear, we are here to share!
Cryptocurrency simply put is a digital payment system that doesn’t depend on banks to verify transactions. Let’s break it down:
1. Digital, meaning that there is no such thing as cash in this world.
2. Payment System, meaning that cryptocurrency was designed to be used to pay for things.
3. Not depending on banks, meaning that cryptocurrency cuts out the middle man and deals directly with the intended party. You become your own bank. This is important, so we’ll dig deeper.
Removing third parties, such as traditional financial institutions from the equation means that payments not only settle faster because there are fewer parties involved, but also that you’re dealing directly with your transactor. It’s peer to peer. Person to person. Entity to entity. For merchants, this means having more control when it comes to resolving consumer disputes. For everyday consumers, this means that things happen faster and are more accessible due to crypto’s decentralized and permission-less nature.
We will dive into technical terminology in future posts that describe the technologies behind cryptocurrency payment systems, but the reason why true crypto bulls are excited about cryptocurrency is that the payments system has unlimited potential beyond being used as an investment tool.
It’s Open To Everyone
Have you ever attempted to open a bank account and been denied? This is something that happens to millions of Americans across the country, leaving them unbanked and having to rely on cash to go about their daily lives. One of the main benefits of cryptocurrency is that anyone can participate; there are no barriers on age, socioeconomic status, or history preventing people from being on the system. With crypto, all you need is a smartphone and you can become your own bank.
Cryptocurrencies allow you to share less personal data, which helps with confidentiality of your payment choices without fear of being analyzed by credit card institutions, banks, governments, or the cookies on your computer. Note that this doesn’t mean total anonymity, but rather pseudonymity, which means that the data that appears is not directly tied to your name but to alphanumeric pseudonyms, or aliases.
Short Settlement Periods
Transactions settle in seconds or minutes.
Seamless Cross Border Payments
Crypto sends money abroad in the exact way that it would transact domestically. There are no hurdles or hefty fees when transacting internationally.
What Can Cryptocurrency Be Used For?
Right now, the majority of cryptocurrency holders use crypto as an investment vehicle due to the swings in prices. While crypto can be used to make purchases, this use case isn’t mainstream yet. With the FLIN project by Flindel, we are changing that narrative by opening doors for merchants to begin accepting cryptocurrency payments so that the direct value becomes more apparent to the everyday consumer. In future articles, we will dive into the benefits behind merchants adopting cryptocurrency as a payment tool, which will increase the transactional use case among consumers.