Why do people want an alternative currency and specifically cryptocurrency?.
There are currently upwards of 1.7 billion unbanked in the world with 600+ million of those being in Africa. The volatility of traditional currencies and instability across the African economy has led many Africans to seek alternatives to the current banking system. The uprising of cryptocurrency and the mobile phone will also allow anyone to control their capital and purchase in ways that have been nearly impossible previously.
As these new technologies become more accessible, no longer in rural sub Sahara Africa will there be a need to partner X for Y.
Cryptocurrency will allow individuals to transact directly and immediately with no need for a middleman or expensive service provider. Bitcoin also provides added safeguards by securing all transactions through blockchain technology.
As the world becomes more flat and a true global economy is established, the need for an efficient, low cost transactional medium is apparent. Digital assets, like Bitcoin, will act as a universal equalizer and allow new members to participate in ways they never could before.–Justin Hartzman—
People want an alternative to currencies issued by central banks because in many countries they are concerned about the inflation and depreciation that can stem from those centralized policies.
Cryptocurrency alternatives tend to be better for peer-to-peer transactions as well as cross-border payments. Many people who don’t have easy access to a bank can still make these payments using cryptocurrencies.People like cryptocurrencies because they are based on cryptography, a method for protecting information that
increases the trust that the transactions will be secure and cuts out the need for expensive middlemen. –Saul Hudson-
For the business community which needs microfinancing, cryptocurrency eliminates a lot of the middlemen – the traditional banks -that make microfinancing too expensive and a lengthy process. Additionally, in many instance, there’s no access to banks in many parts of Africa, so the digital currency is akin to mobile/cellular phones leapfrogging traditional landlines there.– Bob Zeitlinger—
Furthermore , the reason why global citizens continue to seek out new alternative currencies can be traced to the numerous and unsolvable problems wrecking the fiat currency. Key among these challenges include the runaway inflation and tight control over its production and circulation by a few in the society.
Seeking out new currencies is also a form of rebellion against the concentration of wealth (money) in the hands of those in power as well as its ability to fan corruption.
But why cryptocurrency?
Because it solves most of the critical challenges facing paper money. Cryptocurrency, for instance, takes away centralized control and the power to print and distribute currencies from the few in the society to the global citizenry through decentralization.
The move, in effect, helps address cases of corruption and uneven distribution of wealth across the globe. The fact most of these currencies have limited supply further solves such economic challenges as inflation and debasement of money where the value of paper money eventually reverts to its original
value (ZERO.) – Edith Muthoni-
If you examine history, you will find that every single fiat currency has eventually devalued to zero. When ancient civilisations such as Greeks and Romans stepped away from using precious metals, the currency eventually became worthless.
A self-made billionaire friend illustrates the story: in the 18th century, a single $US could buy an ounce of gold, or a man’s suit.
Fast forward a couple of hundred years, and a single $US cannot even purchase a man’s tie… but the ounce of gold can still buy a great suit.
Inflation means that every currency will become zero. This may take a long time (such as the $US), or may happen very quickly (the German mark in 1920’s, or the Zimbabwe dollar in the 2000’s).
I visited Africa in 2010 to deliver talks on investment and business. At the time, there were government signs saying that the use of $US was illegal, and anyone not using Zim dollars would be arrested.
Despite government warnings, the Zim banks filled their ATM’s with $US, so tourists such as myself had little choice.
I also witnessed Africans texting each other phone credit (‘airtime’) in lieu of using vast quantities of virtually worthless currency. This worked particularly well in remote areas, which were several hours’ drive from a bank.
Africans are resourceful and will find a way or create one. As cryptocurrency is scarce and non-inflationary, it is preferable to use this for business and peer to peer transactions.
The added bonus is that crypto is not visible to governments, and cannot be controlled, inflated, interfered with or seized by government officials.
Transaction costs are also significantly lower. I have transferred bitcoin to friends and family in Africa for under $0.13, instead of using Western Union or SWIFT at a cost of $30-70.–Jeremy Britton –
People want an alternative to traditional currencies because they don’t trust that governments can manage their currency value. In some cases, a cryptocurrency alternative has become an investment that better guarantees long term value, with less exposure to economic pressures and risks that come with economic mismanagement.–Jeffrey Cammack—
More Reasons for Cryptocurrency
1. An increasing distrust of banks has created a climate that is ideal for the rise of alternative payment options like Bitcoin and other digital currencies, which are secure and put users in control.
2. The current credit card authorization and settlement system was designed in the 1970s, and it hasn’t been updated for today’s world.
The technology is dated and slow, transactions are hard to track, fraud is rampant, and there are many steps and players involved when moving money internationally. International transactions take days, with multiple players each taking a fee.
Cryptocurrency payments provide an opportunity to move money anywhere in the world faster, cheaper and easier, and they eliminate chargeback fraud and identity theft. Once the transaction hits the blockchain, there’s no reversing it or stopping it, and no charging it back—a huge win for merchants.
3. Crypto payments level the playing field for the approximately 2 billion people who do not have access to a bank account, but do have Internet access or a smart phone.-Casey Olsher-
4. “People want an alternative currency because they don’t have faith in
nation-state currencies. They feel currencies are prone to government manipulation and are subject to especially in emerging markets economies extreme inflation or deflation.” –Anne Szustek Talbot —
In conclusion, There are many reasons for the need for alternative currencies, usually coming down to convenience by the marketplace. One specific situation that always gives rise to alternative currencies though is when a group loses faith in the existing social system.
That currency could be gold, the stronger currency of a neighbouring country, or recently, cryptocurrency. Bitcoin, the original cryptocurrency, was a novel attempt to create a truly a trustworthy digital currency requiring no faith in anyone else.
It was launched in response to the financial meltdown of 2008 and found fertile ground as trust had been completely lost in governments, banks and regulatory agencies.
The technology that was created for this purpose, blockchain, is actually a general solution to any situation where the primary problem is one of trust, bureaucracy or political impediments.
Today, blockchain based cryptocurrencies are a trend that has been spurred on by phenomenal financial gains from early investors. These dreams of wealth convince many to launch their own cryptocurrency, and their marketing to others pushes the industry relentlessly towards higher valuations.
There is nothing truly unique about cryptocurrencies. Airline miles were used as a type of currency for years before blockchain came along. Gift cards from US retailers could be sold on 3rd party exchanges and provided exactly the same service as cryptocurrencies today 2 decades ago.
But the recent explosion in alternative currencies is mostly due to the fact that with the trust issue solved by blockchain, anyone can now launch a currency, rather than only governments or large organizations who have a substantial presence and brand recognition.
On why people prefer alternative currencies. For that, we need to look at history. When Henry Ford launched the Model-T automobile, he made a very famous statement.
Any customer can have a car painted any color that he wants so long as it is black. This was a very utilitarian view of transportation, and it is true that any car will get you from point A to point B.
However, what Ford quickly learned was that cars weren’t just for utility, and as soon as people realized that cars were an expression of themselves, they went wild with models and colours. People will always do this, and the same is true for currency.
Cryptocurrencies have actually launched a new paradigm in money where it is no longer the economists definition of an exchange of wealth and a store of value. Instead, cryptocurrency has added an entirely new orthogonal dimension to what currency is and that is an expression of yourself. Much like cars, it is now so easy to create a new currency that we are going to see thousands of models and colors of currency.
All that we are waiting on to really make this smooth is a mechanism to instantaneously convert any currency to any other at next to no cost.
So the summary is: Alternative currencies have always been desired. The financial crash of 2008 gave rise to blockchain, allowing anyone to create a currency. Strong financial gains have spurred marketing and interest in the trend. Cryptocurrencies are going to allow currencies to expand beyond simply a transfer of wealth and a store of value, and actually add a 3rd dimension to money, an expression of who you are. –Chris Ziomkowski –