Remember the times when things were as simple as coins and notes? When you could easily use tangible tender at any given retailer? We quickly transitioned into the age of plastic money and here we are now at theoretical currency; cryptocurrency to be exact.
What is cryptocurrency?
At its core, cryptocurrency is a digital tender that has taken many forms such as Bitcoins, one of the most widely known, along with Litecoin, Ethereum, and many others. These currencies use cryptography to complete transactions in a seamless and in most cases anonymous process. The technology enables peer-to-peer transactions or transfers of value without the need of a financial institution or organization. What many don’t know is that the beginning of this amazing, decentralized medium of exchange started developing before the now famous Satoshi Nakamoto announced Bitcoin in 2008. There were other mediums such as Digicash and E-gold that ran into trouble, but the concept was there. Today there are over 1000 types of cryptocurrencies.
Why such popularity?
The growing popularity of cryptocurrencies can be attributed to anonymity, speed of transaction, and the security challenges surrounding the use of the fiat money and financial institutions. Cryptocurrencies like Bitcoin leverage a technology called Blockchain, which is a digital, decentralized database of records.
The original concept of cryptocurrency was developed to improve upon the downfalls of tangible, fiat money. Centralized regulatory bodies, an unlimited money supply, ease of counterfeit, and of course red tape regulations are only the tip of the iceberg in terms of the issues with the money we exchange on a daily basis. As we shifted into a more digital environment where everything happens at the click of a mouse, our tender needed to follow suit.
The future of cryptocurrencies
While currently we are experiencing rapid changes, the future of cryptocurrencies can only be speculated. As of now many companies like Overstock, Paypal, Microsoft and Square are leading the way in the acceptance of Bitcoin as a method of payment. While most cryptocurrencies cannot be formally exchanged for products and services, the larger ones are gaining acceptance in the marketplace. Despite the slow integration of cryptocurrencies, retailers are facing challenges in countries like China, where Bitcoin is outright banned.
However, despite some roadblocks and setbacks, countries like Japan are enthusiastically embracing the crypto movement to the fullest. According to CNBC International, Bitcoin trade in Japan accounts for nearly half the global trade volume. This number has surged since the government passed a new law recognizing the digital currency as a legal form of payment. This new law has encouraged large retailers to partner with bitcoin exchanges. There are already over 4500 stores that accept this form of payment, and this number is expected to increase fivefold by the end of 2017.
As more countries continue to accept the crypto movement, additional growth and development is certainly on the horizon.
