Cryptocurrencies have gained a lot of popularity across the globe today. Cryptocurrencies have eliminated financial barriers by allowing people to conduct online transactions using virtual money at a lower cost. The rise and the popularity of the internet have increased the need to develop a currency that can be used to conduct business in the virtual world. Today, some cryptocurrencies have dominated the financial world. Cryptocurrencies such as Bitcoin, Litecoin, and Ether have become popular currency alternatives and used to purchase items electronically. Additionally, they are used in stock market investment. The cryptocurrencies have taken the financial market by storm. However, there is confusion that is surrounding the effectiveness of the cryptocurrencies, and it is essential to educate the world on the impacts of the virtual money.
Cryptocurrencies have had a strong political climate helping them gain popularity. The age of money is a political role which is done by the government through the central bank. The United States Federal Reserve was created in 1913, and it gave the central bank control of the creation of money. The issuance of money has been abused by some governments promoting the use of a currency that cannot be controlled by the government. The abuse of power by states has led to the development of cryptocurrency. One of the most significant impacts of the cryptocurrency is decentralization of money issuance. The government does not control cryptocurrencies. They are created through solving various mathematical problems using specific software. The government has no power to regulate the cryptocurrency, and it is up to the people to determine the amount of currency that will be produced through the problem-solving software. The cryptocurrency is decentralized because the government does not back them. Hence a user can transact directly without the interference of the state. A cryptocurrency is a form of political and economic resistance. The people feel that the government is abusing the monopoly power of money creation to enable individuals to accumulate wealth at the expense of the society. The cryptocurrency provided people with freedom and taken away government control on online cryptocurrencies transactions. Fortunately, the decentralization of the cryptocurrency does not impact on security. Cryptocurrencies such as Bitcoin have developed ways to ensure that the currencies are secure. The Bitcoin has generated a Blockchain where a record of all Bitcoin transactions is maintained. The people who create Bitcoin must provide proof of work statements which are recorded in the Blockchain: this enhances transparency, and Bitcoin users can understand when Bitcoin was designed and how it has been sold and bought over time. Cryptocurrencies are a decentralized form of currency with a political impact, and at the same time, they offer a high level of security.
The use of cryptocurrencies will replace the conventional methods of payment. Recently, the use of cheques and cash has declined. E-commerce and electronic payments have been on the rise in the last few years. Today, most people are relying on conventional methods of payment such as MasterCard. There is a possibility that the cryptocurrencies such as Bitcoin will replace the recent traditional networks in the future. Some characteristics make cryptocurrencies a better usual method of payment. The first one is cryptocurrencies are easy to use. Conventional methods of payment such as Visa rely on third parties to facilitate the transfer of funds. A business must set up a bank account to use the Visa, MasterCard, and Interac. However, cryptocurrencies do not require third parties, and one can quickly make their transaction from anywhere around the world. The second one is the cryptocurrencies eliminate the user logistic issues. The Bitcoin network will conduct a deal regardless of the physical location of the buyer and seller. The physical location of the people involved in the transaction does not impact on the speed and cost of operations. Conventional payment systems are expensive and cumbersome when handling sales of people in different countries. The third one is security. The cryptocurrencies are secure and free from fraud and corruption. Conventional payment methods have been vulnerable to fraud. It is estimated that over $21 billion is lost in traditional methods of payment. Digital currencies and especially Bitcoin are secure. The systems are transparent to prevent fraud.
Bitcoins have lowered the cost of conducting online transactions. Bitcoins are gaining popularity in the virtual market. They have become widely accepted as a form of currency. Today, businesses are accepting cryptocurrencies as a form payment. Online shoppers are using the cryptocurrencies often. Research indicates that in 2016 more than 1 million cryptocurrencies were added and exchanged in the virtual market. The cryptocurrencies are gaining popularity because they have lowered the cost of the online transaction. A good example is Bitcoin which unlike banks, it does not require the user to pay transaction costs reducing the cost of exchanging Bitcoins. Additionally, cryptocurrencies do not need considerable costs to set up. One is only required to have a computer or a smartphone, and they can install the cryptocurrency wallet at no fees. Bitcoins supports micro and macro payments. When one is making a small sum, they do not have to pay an enormous transaction cost. Some conventional methods of payments charge a higher transaction cost than the value of the amount being transferred. It also supports macro payments by ensuring that users do not pay considerable transaction costs for transporting large amounts of money.
Cryptocurrency is the new form of currency. They have a massive impact on the political and economic environment. Cryptocurrencies are seen as a way of providing people with the power to control money and ensure that government does not abuse its powers. It is having a massive impact on the way conventional business methods. Compared to traditional methods of payments it is safe and secure, cost-effective, and comfortable method of payment. However, it is important to note that cryptocurrencies are a new form of currency hence they have some shortcomings. The risks associated with cryptocurrencies are being addressed to make digital currencies a preferable type of money in the globe.