Why cryptocurrencies are relevant and here to stay
Cryptocurrencies are becoming more relevant than ever in today's increasingly digital society. Learn why crypto is here to stay.
Innovation is not always greeted with open arms, especially by those who don’t yet understand them. Many people still insist that cryptocurrency is too wild of a concept, and question its fundamental use in society.
On the surface, especially right now, it seems that cryptocurrency is commonly used as a speculative investment vehicle, more so than actual currency for everyday use. However, this doesn’t mean that the crypto community is parading themselves into a tech bubble, as some financial market public figures would think.
The underlying technologies behind cryptocurrency solves many problems that are unknown to society. We can start with any issue in the modern world — digital privacy, bureaucracy, monopoly, traceability, counterfeiting, censorship, data security, and more.
Following through years of research on technical solutions to these problems, we’ll eventually end up with technologies that cryptocurrency uses — public key cryptography, digital signature verification, blockchain, distributed ledgers, decentralised computing, crowdsourced services, and more.
In this article, we’ll be exploring some key problems in modern society, and how various components of crypto technology are relevant in the solution to these problems.
Proving that something is yours without backing from authority
In an ideal world, we can trust each other to take responsibility for our actions through our role in society. However, human beings are naturally self-motivated. This makes a trust-driven society vulnerable to those who would abuse their power.
Leadership and authority are still necessary for certain situations, when after all we are social creatures. However, they don’t have to be involved in all aspects of our lives, especially when it comes to proving that something of value is in our possession.
Blockchain offers a data structure that is private but extremely difficult to tamper with. This makes it an ideal place to store important ownership records.
This is why crypto investors are able to confidently put their money into an intangible digital product. Nobody can deny them their wealth in crypto, as long as they have access to the keys to a certain amount of cryptocurrency on the blockchain.
Explore further: What is Blockchain Technology? A Simple Guide.
Proving your identity without revealing your whole identity
Nearly all organisations will require you to submit at least a photo of yourself, if not your identification card such as your driver’s license. This is fine if you trust the organisation. However, not every party has the capacity or willingness to keep your identity secure.
Unfortunately, we live in a world where even when a company has been caught red-handed at spreading and profiting from their user IDs to an unexpected third party, the victims are still using the company’s service.
Luckily, digital signatures provide a way to verify that we have done something (e.g. signed up for an account, sent a message, approved of a transaction, etc.) without revealing anything useful about our identities (such as our ID number, name, and location)
On the blockchain, each private key is controlled by at least one identity. This means, on a truly decentralised platform (say a blockchain-based social media platform), you can create content and ‘sign’ it using your private key as proof of authenticity.
This digital signature will not reveal your private key. However, anyone can use your public key to verify that the only person who could possibly form that signature was you — since you hold the private key that makes that signature.
Learn more: How Do Cryptocurrency Wallets Work?
Creating a self-regulating and perpetually active network
You may think that services as important as financial services must be available at all times for their customers. But even large banks have holidays, and most banks close after 4:30 pm, offering customers no time at all to assist them after their 9-to-5 work hours.
Other businesses that happen online must be wary of extended or frequent down times, which can hurt their businesses by taking away current and future profits.
Even regular brick-and-mortar businesses must also be wary of internal politics that can stifle productivity and even cause decisions that are not in the best interest of everyone in the organisation.
Cryptocurrency networks are interesting from this point of view. By not having a central location of authority, crypto networks create a backup whenever an individual operates a node, regardless of the location and jurisdiction.
For example, Bitcoin has never paused validating transactions since January 2009, and is always available 24/7 for users wherever they are.
Many crypto networks change and adapt based on the will of the token holders through decentralised governance, without the supervision of a centralised authority.
Yet, even if Bitcoin does not have a formal protocol for decentralised governance, the success of the Taproot upgrade proves one thing. A formal government or a board of directors are not required for a decentralised global network to adapt to the needs of its users and operators.
It’s as if the whole Bitcoin community is working towards one common goal, irrespective of their cultural or national interest. This goal is to make Bitcoin more scalable and cheaper to use.
Learn about the first ever cryptocurrency: What is Bitcoin? A Complete Guide in 2021.
Creating an efficient delivery system that reaches everyone
The “last mile” problem is a classic puzzle for all delivery systems that reside in a multitude of industries, from logistics to IT. Companies must balance between the investment in implementing infrastructures and routes, and the number of people they can reach.
Crowdsourcing is one solution that becomes increasingly apparent in the world. Whether that is in the ride-hailing or property rental business, vendors don’t need to own many assets in order to do business. Instead they become “brokers” between asset owners or freelancers and customers.
However, this solution will become even more useful when decentralised network technology is put into the equation. Some crypto networks are dedicated to delivering content and digital products as efficiently as possible through crowdsourcing.
Each user not only acts as consumers in this ecosystem; they also have the power and the incentive to relay data to the next user, effectively creating a digital supply chain.
Users can also simply act as a point of presence, similar to an Internet service provider, where data can be transmitted through them without relying on centralised infrastructures like repeater towers or servers.
This is a beautiful solution to a classic problem. When something can now be done efficiently, fewer resources can be expended for it, which creates opportunities to move on and focus on other problems.
Blockchains applied: What is Theta Fuel (TFUEL)? The Decentralised CDN Explained.
As long as problems like these exist, crypto technology will stay to solve them
Long ago, the Internet was a strange idea. People didn’t think it was necessary for them to have a personal connection to millions of other computers around the world. They could simply use services that are more familiar to them — the post office, the library, or the telephone line.
In fact, the Internet was not initially built for searching for content, and consuming or sharing them with other strangers. The first network that uses the modern day Internet protocol (TCP/IP) was the ARPANET, a military-run surveillance system to track aircrafts and flying objects in Cold War America in the 1960s.
So, there is actually a parallel between the Internet and cryptocurrency networks. Maybe right now, there is a limited (but growing) use of cryptocurrency networks.
After all, we’re still in the early stages of the technology (compare 50 years of Internet vs. less than 15 years of crypto technology).
We honestly cannot speculate on which cryptocurrency will be prevalent in the future. After all, we couldn’t anticipate the rise and fall of web browsers, websites, and web services, or the incredible adoption of pocket-sized home computers, also known as smartphones.
Yet, one thing is always certain — cryptocurrencies are here to stay.
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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated October 20, 2022