On January 3, 2009, the first bitcoin was mined, which has greatly affected the world we live in now. Now, in addition to the traditional financial system, which is a complex and long-established infrastructure which includes banks, central banks, various financial institutions and exchanges that can do whatever they want with your money if they need to, there are also cryptocurrencies, which give complete anonymity, control, and many more opportunities for everyone, and we'll talk about that below.
The Idea of Cryptocurrencies
Firstly, it is worth noting that the First Cryptocurrency was based on the ideas of some subcultures and ideologies, mainly Cypherpunks' and Crypto-anarchism, which were successfully implemented by Satoshi Nakamoto. Why their ideas? Well, let's analyze.
Cypherpunks appeared in the early 1990s, they stood for the use of cryptography and privacy-enhancing technologies, with which wanted to achieve privacy and security for all, while Cryptoanarchy as a political ideology was based on the protection of privacy, political, and economic freedom, whose supporters used cryptography to preserve their privacy and security when receiving and distributing information through computer networks.
In 2023 the average cryptocurrency ownership rate was 3.9%, which means there are over 300 million people using cryptocurrencies globally. These ideas used to be prevalent mainly among geeks and blockchain developers, when now a huge number of people are thinking about it.
Previously, these ideas were mostly spread among geeks and blockchain developers, but now everyone is starting to think about it. This can be easily understood just by looking at the average cryptocurrency ownership statistics for 2023, which was 3.9%, meaning that there are already more than 300 million people who use crypto in their life.
Comparison of the Traditional Financial System and Cryptocurrencies
Security and Trust
In the traditional financial system, security depends mainly on intermediaries such as banks and financial institutions. While these entities play an important role in keeping funds safe, they are also vulnerable to security breaches and fraud.
Cryptocurrencies, on the other hand, use advanced cryptographic technologies within blockchain technology, making it extremely difficult for unauthorized individuals to alter transaction data, and get access to the user's money. The high level of security is appealing to those looking to improve their own security measures, but it also has disadvantages.
Each wallet has both a public and a private key. The private key is a like a password that allows you to perform operations with the assets on the wallet, and the public key is, or the address generated from it, with which everyone can check the balance and all transactions of the wallet.
The problem is that only users can control their finances, meaning that they are fully responsible for access to money and its security. We have already discussed how you can protect your crypto, you can read about it here.
Anonymity
The traditional financial system requires users to often provide a lot of personal information, including identifying information, in order to make transactions and manage accounts. This can raise concerns about privacy and data leakage, while cryptocurrencies can offer a higher degree of anonymity, as transactions can be conducted anonymously without revealing identity.
But anonymity can be lost, as all incoming and outgoing transactions of the owner's and all associated with it wallets can be analyzed, and some clues can be found, but it's actually much harder to do than it may seem.
Accessibility
The traditional financial system has geographical limitations and may not be accessible to everyone, especially those in unbanked regions. Cryptocurrencies, being digital and internet-based, have the potential to provide financial services to everybody, including those who cannot access traditional banking services. This inclusiveness is a significant advantage of cryptocurrencies.
Transaction Speed and Cost
In traditional finance, cross-border transactions can be costly and time-consuming, involving multiple intermediaries and currency conversions. Cryptocurrencies, with their decentralized nature, offer faster and more cost-effective international transfers. This efficiency can be particularly valuable for businesses engaged in international trade or individuals sending remittances to family members in other countries.
Recently, PayPal has launched their own stablecoin PYUSD, Visa has expanded its stablecoin settlement capabilities with Circle’s USDC stablecoin to the Solana blockchain, and a lot more similar things will happen in the future, it is just inevitable.
Innovation
Bitcoin has sparked innovation in the financial sector, encouraging traditional financial institutions and individuals to explore blockchain technology and digital assets. These innovations have led to the development of new financial products and services, such as decentralized finance (DeFi) protocols, which aim to decentralize traditional financial functions such as money exchange, lending, borrowing, staking, and liquidity mining, while maintaining the privacy of all its users.
Conclusion
Looking at all this information, it becomes clear that crypto can help absolutely everyone get access to quick, privacy-oriented, cheap, and secure transactions, and this is the minimum they can give us, because there is a huge number of DeFi protocols that provide access to investing, borrowing, lending, and other services connected with money.
The technology of cryptocurrencies can really give people Financial Freedom, and it is only a matter of time when everyone realizes this.
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