Cryptocurrencies are relatively new forms of commerce and payment systems, and despite only being around for a few years there is an ever-increasing supply of currencies that utilize blockchain technology. Any visitor to CoinCodex can become lost in a sea of hundreds of different cryptocurrencies and with this continual growth in the sector, it becomes necessary to pose the question once again of why are crypto currencies actually useful.

The Internet of Money

Cryptocurrencies represent the merger of money with technology and as a result are able to provide upgrades to our traditional financial systems. All currencies are born out of a need to trade either goods or services but every “fiat” currency in use today has its limitations. For example, currencies are tied to nations and geographic regions and moving significant amounts between nations can prove problematic due to government regulations. This is where the major benefit of cryptocurrencies becomes clear, the decentralized nature of blockchain technology means that “internet money” cannot be controlled by a central entity. Bitcoin was famously created by the mysterious Satoshi Nakamoto who disappeared almost immediately as his presence was not needed for Bitcoin to flourish. Since its emergence in 2009, Bitcoin has gone on to solve a number of real world problems.

Real World Solutions

Bitcoin and cryptocurrencies in general have solved the problem of centralized, governmental control. With traditional currencies, governments control the supply of money and can manipulate the supply as they wish. This can lead to massive hyperinflation as governments simply look to print more money in order to ease debt problems. It’s also clear that the management of a nation’s currency cannot be held in the hands of a small number of individuals due to the fact that “absolute power corrupts, absolutely”, cryptocurrencies solve this problem by shifting control and responsibility to the community of users via software.

Alternative Banking

Cryptocurrencies also provide real use to anyone that needs to interface with today’s banking system. Most banks have become inefficient in dealing with money transfers and the average customer has to deal with high fees, slow transaction times, and high levels of bureaucracy. Cryptocurrencies solve these problems by cutting out the middlemen. Transactions can be sent and received directly between peers and confirmed within minutes. This opens up a number of possibilities for almost instant, low-fee transactions. People can now pay for coffee, lend money to family and friends, or donate to their favorite charity without having to use their bank.

Blockchain based currencies are an alternative to the banking system and are providing relief to people outside traditional banking. The unbanked or adults who don’t have an account at a traditional financial institution are common in more developing economies. Over 2 billion adults in Africa, the Middle East, and South East Asia have to depend on family and friends to perform simple financial transactions. Cryptocurrencies allow these people to interact with society and transfer value independently and as a result develop their economies. These people are also able to interact with the greater community of cryptocurrency users and gain access to new flows of income.

Cryptocurrencies are useful as they allow us to take control of our financial activities. We now have the ability to perform simple transactions such as making a donation without the traditional banking system and as technology develops so too will the usefulness of cryptocurrency.