10 Reasons Why Digital Money Is the Future
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27.10.2023
Losing your wallet or just forgetting to bring it along is a problem that a lot of people faced in the past; however, a modern person would rather leave their home without their pants than without their phone. People have an app for everything, ranging from food delivery to transportation and entertainment. Most importantly, more people pay with their phones than ever before. This is just one of many reasons why digital money is the future. Here are some other reasons you should consider.
Convenience and availability
The most important thing about digital money is the fact that it’s incredibly convenient. You don’t have to carry around old-school wallets or look for the location of the closest ATM. All you need is your phone, which is an item that you’re not parting with either way.A germophobe no longer needs to worry about cash or someone touching the keyboard of the ATM before them; they just have to whip out their phone, access their platform of choice, and start making payments. It’s really that simple.
Most importantly, starting an account on cryptocurrency platforms or opening a crypto wallet is incredibly easy (but we’ll return to this later).
Low transaction costs (lower than banking services)
Perhaps the main reason so many people pay with digital money is that fees are much lower than traditional banking services.So, why are these fees so much lower, and how can they afford it?
Many cryptocurrencies are decentralized, meaning there’s no central authority sustaining a huge and inefficient bureaucratic apparatus. There are no expensive downtown offices with stellar rents, meaning they can just pay the bare minimum to maintain servers and run such a huge operation.
Miners, the moving power behind this concept, are incentivized through consensus mechanisms (proof-of-work or proof-of-stake). This makes the entire financial field even easier (and cheaper) to run, which makes them competitive even with fiat currencies.
Innovative payment methods
Younger generations are more tech-savvy than their predecessors and prefer to pay electronically. Since they’re already using apps to order food, rides, and anything else they need, this is usually their preferred payment method. They are not in the habit of carrying traditional wallets and are not too keen on paying with cash.For a business, the integration of more payment methods means a reputational boost as well as a revenue boost. Just think about it: if you don’t support the payment method of the client’s choosing, what will they do? Stick around until you include it, or go someplace else? The latter will ensure that more and more people see this payment method as a viable option.
New assets to invest in
The emergence of crypto has provided potential investors with one more asset to invest in. Everyone saw how, after years and years of underestimation, Bitcoin exploded in 2017 and again in 2021. The value of this crypto didn’t just explode; it exploded so much that some people turned into millionaires overnight.There are a lot of people who would like to emulate this success. Still, such a thing requires quite a bit of research. You must develop your independent research methods and keep up with all the headlines. For instance, according to Techopedia, there are quite a few coins that might explode in the next few months. Still, you should independently research each that you plan to invest in.
Self-executing (smart) contracts
With the help of blockchain (another crypto-related technology), we’re standing on the brink of a smart contract revolution. Namely, blockchain gives these contracts a level of reliability since the information in the ledger is immutable.The way it works is simple - the contract is run by an algorithm looking for the status of the conditions mentioned. Once the conditions are fulfilled, the contract is immediately implemented.
Now, since, most of the time, payment and trigger events will be automated and pre-determined, this will make it possible to handle even some of the most complex financial transactions in a matter of minutes (even seconds).
The number of potential applications for these smart contracts is fairly long, and as the list increases, so will the popularity of these contracts.
Higher environmental sustainability
One of the biggest concerns regarding the crypto industry is that these servers are quite power-hungry, while some even accuse server sites of having a negative environmental impact on their vicinity.This is why this entire industry is becoming greener. Green hosting is already a huge and popular trend, but it won’t stop there. Soon, most of this industry will run on energy generated from renewable sources.
Once this takes effect, even the last decent argument of the anti-digital-money crowd will cease to exist.
Immutable transaction records on the blockchain
When digital money first appeared, there were a lot of people who worried about the viability of this technology. If you can make these coins out of thin air, what stops you from doing so? Fortunately, blockchain put an end to all these stories.This is not just a specific technical upgrade of digital money, but even an optics win. Even people who don’t understand how blockchain works know people can’t change it at their behest. This will reduce mistrust in the business world and open the doors to many exciting possibilities.
Cross-border transactions
One of the biggest arguments in favor of using digital money is international remittances. Simply put, a lot of people immigrate to developed countries like the Netherlands to work there and send a part of their income back home.Since digital money can be transferred in a matter of seconds (you don’t have to calculate the work hours of a bank branch in a different time zone) and the fees are lower, digital money is the only natural choice.
You don’t even have to deal with expensive conversion when sending money in cryptocurrency. Instead, it can be received by anyone with a smartphone and a suitable app. This inclusivity is another major advantage that we’ll discuss a bit later.
Deсentralized finance
Due to many failures in recent history, many people show a great deal of mistrust for financial institutions. Time and time again, people see huge machinations in place, and very few people are ever held accountable. It’s the little people who suffer the most.In decentralized finances, users have full and direct control of their money without much need for an intermediary. This is also a ground that leads innovation and encourages the financial empowerment of all asset holders.
Higher inclusivity
Digital money is incredibly simple to use. You only need a credit card, the right app, or a crypto wallet. Each of these things is incredibly easy to obtain in this day and age.For crypto, the procedure is as simple as it gets. All you need to do is pick a crypto exchange website, register your account (and verify your identity), and follow the instructions on the platform (it’s slightly different but very similar for different exchanges).
In other words, it’s something that any adult with the right ID (for verification), a smartphone, and an internet connection could do in a matter of minutes. This level of inclusivity is unprecedented in the financial world. It’s not digital money; it’s the concepts behind it that are so appealing. It’s not that the concept of digital money has anything inherently amazing about it. It’s just that it’s a completely new idea with many underlying technologies and quality-of-life improvements. These are new, exciting technologies, lucrative assets, and comfortable payment methods that will boost your everyday. Even if crypto doesn’t change the future of finance, fiat currencies, and traditional payment methods will have to adopt some of these trends. Still, as it seems, the future of finance lies in digital money.