2018 Cryptocurrency Review: A Threat to Traditional Investing
If you were to spend any length of time looking into the world of investment, you’ll notice one trending emotion: fear. Just like old-school advertising and business went through a metamorphosis with the rise of the web, the same is happening now with currency. Why? It’s because of the introduction of cryptocurrency. This unique platform is single-handedly leading the charge against investment, and looks set to transform how we manage and deal with money for a long time to come.
Investment was once built upon a different kind of mentality. With more businesses than expected in 2018 now taking Bitcoin and cryptocurrency payments, the revolution is slowly beginning. Online-based currencies are becoming increasingly common, and it poses a threat to currency that the traditionalists could never have envisioned.
How so? It’s because while old-school cash and coins are literally stored in a vault, digital currency is stored on a server. At the moment, the financial industry is standing atop a seismic shift that’s going to pull the ground apart from under their feet.
Cryptocurrency is a major threat to traditional investing — make no mistake. Why is it such a threat?
Cryptocurrency: What Is It?
According to Michael Cao, cryptocurrency is a major umbrella term for numerous currencies like Litecoin, Dash, Dogecoin, Bitcoin and various others. It’s a form of decentralized currency with no owner, no leader, and no particular regulation. There’s no form of government lauding this kind of finance, which means it’s actually much safer from the grips of corruption.
Add in the fact that it’s all developed in entirely open-source environments, and its success is so easy to see. Everything is controlled via a coded peer-to-peer network. No single person or group can affect the currency. This means that unlike traditional currency that’s lost most of its original logic, there’s nobody here who can rig or play the system with cryptocurrency.
As you might imagine, that leaves those who set the terms on traditional currency out of power and out of the loop. Everything is marked into a digital ledger with special techniques used to make sure that all identities are encrypted and all records are 100% accurate. Personal data is more secure, and every transaction is guaranteed to be accurate.
The job of the ledger is to help show how much you have in your digital wallet. It also ensures that every single balance is checked prior to an investment being made, making sure you are only spending your own balance and nobody else’s.
Since everything is mined through a computer-scripted problem to help confirm a transaction and amend the ledger, it’s impossible to game or corrupt. Given the fact that all currencies are printed or released as a maximum amount, you are given a piece of the set value that was decided upon when the currency was first released.
The value is not decided by arbitrary factors that are out of our control. It’s entirely community controlled, with the value of each piece of the currency determined by the backing of the value of the currency.
The New Gold Standard
That might sound odd, but since the end of the Gold Standard, there’s really nothing backing up the majority of currencies you have in your real wallet. People are often put off by the idea that there is “no proof of value” in a cryptocurrency. Well, where’s the value in the money that you have in your pocket? There’s actually more chance of that being worthless than there is a community-controlled currency!
Just look at the skyrocketing value of all forms of cryptocurrency. If you were smart enough to have put around $500 into Bitcoin, for example, in 2010, you could be sitting with a cool $10m in Bitcoin. This shows that there is inherent value in the growth of these currencies; free from the market manipulation that takes place with most “other” currencies.
As stated by Michael Cao, since the backing of the community props up the value of the money, it’s a far more just system. Now a currency cannot lose value due to game playing and political skullduggery; it takes the people to change the value. With traditional investment avenues on the other end of the spectrum, where you have no say over value, it’s easy to see why cryptocurrency has amassed such a huge following.
The Threat to Traditional Investment
So, at the moment, the main implication that they face is how transactions take place. Without banks being able to be the middleman, transactions take place in the palm of your hand via a smartphone. The aim is to help make a trade and the ability to play with finance a more accessible option outside of Wall Street.
Now, if you need financing for an idea or to help start something, you have more options. In the past, you could either go to a bank and get hit with terms never anywhere near in your favor, or you could go to an unregulated lender and risk playing with fire. Now? You can turn to a source of financing far less likely to turn you away for failing some arbitrary metrics.
The banks are scared; the likes of BNP Paribas, the French banking giant, has already shown in the past via reports that there’s a fear of traditional banking quickly being made redundant. With global trust at a low with most traditional facilities, is it any wonder people are so happy to have an alternative?
With banks slow on the uptake to change to match customer preferences and requirements, and cryptocurrency ahead of the game, people are choosing the ones who listen to them. With everything from how you gain access to funding no longer driven by financial power by the banking class, there’s an acute threat that you can achieve far more than you might have intended.
For the banks to survive, they need to invest majorly in changing everything from how they provide customer service to the kind of digital offers you can make the most of. Otherwise, they run the risk of being replaced far quicker than any of us could ever have imagined.
Source: 2018 Michael Cao Cryptocurrency Review: A Threat to Traditional Investing
