What is a Decentralized Currency and Why Is It Becoming More Popular?
In today’s day and age of technology, the consumer has more options than ever before. No longer are we required to rely on any one source of goods or services. The internet has revolutionized society from having to subscribe to just one or a few options available, to having a growing freedom to choose from a wide range of options. Here we will talk about what a cryptocurrency is, what it means to have a currency that is decentralized, and why it’s significant having these innovative changes present in today’s financial market.
“Cryptocurrency” itself is defined as a digital asset or digital currency, created and designed to work as a medium of exchange in our current market. This digital currency can be used the same way as any unit of exchange (the US dollar, for example); that is, it can be traded for goods, services, or other currency at the exchange rate. It is classified as an alternative, or virtual currency. A lot more privacy respecting in respect to Credit Cards, Bank Transfers or Cash payments, since your purchases can’t be used to promote third party ads in the simplest way. Because it is not regulated by one central banking authority, its organization is considered decentralized.
What “decentralized” means is that rather than a central bank (like the US Federal Reserve) having full control and autonomy over the printing, production, and backing of a currency, a cryptocurrency can be created and validated by a variety of sources. Many think of decentralized as being fractured or fragmented; however, each of these branches forms its own level of independence or autonomy, which is actually quite favorable in a capitalist society. Any entity skilled in the cryptocurrency market is able to form and back a cryptocurrency and therefore establish its validity. There is no one institution that does this, as in a centralized market, and therefore is less likelihood for the abuse of power. This is great news for the consumer who is looking for the best advantage and investment.
So what does the option for utilizing decentralized currency mean for our financial sector? First, that there are more choices for consumers. It will be necessary quite soon for conventional markets and suppliers to adjust their capabilities toward receiving cryptocurrency as valid source of exchange and payment. Secondly, it is a shift for the traditional centralized banks who will have to adapt to and make room for alternative currencies. Their measure of the degree to which hard currency is needed will be altered by the presence and use of cryptocurrency. And third, it means that the cryptocurrency market will have the challenge of defining and setting apart secure cryptocurrencies versus those that are newly-emerged or lesser-established. For the sake of greater confidence and validity with consumers, cryptographic methods (similar to methods used by a central bank to thwart the use of counterfeit monies) will increase and provide job opportunities.
All in all, the product and consumer markets of the 21st century can expect to see more decentralized products, services, and currencies through the use of the internet and encryption technology. There is growing demand for goods that put power back in the consumers hands and allow to make its way through every market, even down to how we obtain and use our money.