Cryptocurrency has been a hot topic for a few years. It has gained a significant value ever since the pandemic and is continuing to grow. While many know the value of crypto, very few know the purpose and objectives of digital currency. Let’s explore the underlying meaning behind digital currencies.
Objectives of cryptocurrency
1) Decentralization of money
Cryptocurrency focuses on protection and transparency. It removes banks from the equation and let the users take control over their assets. Decentralization of money is the core objective of cryptocurrency coins. Only the user can access them, and no central authority such as banks or government have power over the investors, which gives a sense of freedom to the traders involved. Decentralization also helps cut down the cost of middlemen, banks or any third party involved in a transaction. They often charge a hefty amount as a fee.
2) Providing top-notch security
Most assets that are digitally stored are prone to hacking. There have been cases of data theft leading to financial loss. But with cryptocurrency, the chances are minimal. It uses blockchain technology which makes it impossible for any hacker to exploit.
Even fiat currencies are open to scams or theft. Tangible assets can be stolen or lost, but as cryptocurrency does not have any physical existence, they cannot be lost or stolen.
3) Freedom for investors
When bitcoin was created in the year 2009, one of the core ideas was freedom of choice. With banks managing finances, users have little control over their money. Cryptocurrency gives its users the liberty to use their money however they want. With cryptocurrency, even unbanked economies would benefit from it. There are tons of options for users to choose from, and there are no barriers or any requirements to start trading.
Bank does not allow the user to withdraw a large sum of money as they have a daily or monthly withdrawal limit set. It is often the case where users have to have a certain amount of funds in the account at all times. The ease of doing business is affected by such barriers. With cryptocurrency, users can benefit from fast transactions and almost no barriers to entry. Any user can start trading with cryptocurrency. Fiat currencies lose value over time, but crypto has a history of gaining significant value over time. It is also a good investment. There is no withdrawal limit set for these digital coins, and there are no pointless deductions from your account.
4) Battling inflation
Inflation control is one of the top priorities of a government. Over time fiat currencies lose value resulting in a price increase for goods and services. Cryptos such as bitcoin have a limited supply. Bitcoin has 21 million coins altogether with half of it yet to be mined.
5) Replacing paper currency
Banknotes are made up of wood and cotton paper. It involves cutting down trees to retrieve the material required. As paper currency have a physical existence, it can easily be lost or are prone to wear and tear. Cryptocurrency is here to change that. Unlike paper, these crypto coins are intangible. It makes them impossible to be lost or lose value with wear and tear. In near future, crypto can replace these banknotes as the world is moving towards digitalization.