Is “Real” Money at Risk of Extinction?
It can be very hard to imagine placing as much emphasis and value on something intangible, like Bitcoins, when we are so used to the concept of physical money. When we think of people who are ‘rolling in it’, we automatically picture someone who is literally rolling around in bundles of cash! That is simply how the mind has been tuned to work. Until now, that is.
Why Has Money Not Yet Been Fully Digitised?
Over time, we have started to have much more interest on our non-physical valuables, like internet connections, data allowances, our business’s website and our social media accounts. And with our lives fast revolving towards a hi-tech, digital existence, it is hard to comprehend why we still use notes and coins as a form as payment.
Developers have for years been coming up with innovative ways to make our lives easier, like creating apps for electronic boarding passes, online wallets to store our credit card details and personal accounts for holding our e-vouchers in – all of which have been to prevent us having to carry important documents or items around and risk losing them. However, technology is finally getting back up to date with the introduction of tools like Apple Pay, allowing you to pay for items using your mobile phone with a card reader. It also involves what we will be discussing in more detail below: the creation of cryptocurrencies.
Cryptocurrencies – Challenging Our Instincts
Although cryptocurrencies are a form of currency, it is important to note that, as yet, there is no plan for them to replace our current monetary system. Anyhow, there are various different cryptocurrencies, including Bitcoin and Ethereum, so it could never be a case of just making a straightforward switch, since all have their individual benefits and attractions that would need to be weighed up. For instance, the different highly volatile cryptocurrencies each have their own exchange rates, measured in pips.
How Do They Work?
Cryptocurrencies, which are more than just an online version of money, are at present used for trading and exchanging purposes across the world market. Their providers do so using a blockchain ledger system, which is far from the current business model we see in central world banks. Rather than mimicking the concept of money, cryptocurrencies reinvent the idea of value, finding it in what could be seen as nothing, to some, but computation. The best thing is that the source of their value could develop in the years to come, meaning that the currencies and their value in the market will continue to evolve.
Can Cryptocurrencies Replace Our Money?
Although cryptocurrencies, as they stand, are not designed to replace our existing money structure, as they are so very different, we are also quite far from the world being ready to adopt a brand new online currency. However, the good news is that the developments have shaken up the financial sector and made them pay more attention to standards, competition and risk. As a result, more emphasis has been placed on safeguarding our investments using new digital advancements, such as preventing fraud by unifying transactions and analytics and focusing on making their mobile payment systems more robust.
This article was written by Ben Palmer, Managing Director, IJB Global.