As the quality and complexity of cryptocurrency technology continues to grow, companies and consumers alike are starting to appreciate the true meaning of a democratized and decentralized monetary system. Generally speaking, cryptocurrency is safer, faster, and more reliable, and the already explosive adoption of cryptocurrencies like Bitcoin has led many to think that wider institutional usage is soon to follow.
In this article, we'll be discussing the following:
Traditional, fiat currency transactions are inefficient and manipulative. Big banks or other third-party intermediaries often add considerable costs to what should be simple transactions from one party to another. These costs come in many forms, but the bottom line is that there is no inherent need for them to charge as much as they do - most of the time, they simply do so because they can get away with it.
For example, the average credit card charge in the United States was recently calculated at 2.30%. This means that a retailer that might have previously charged $100 for a product will now charge $103 or more. This adds up fast, and for many consumers, a 2.3% charge can be a significant jump in the base price. These extra charges impact purchasing decisions, leading to goods or services going unpurchased, and ultimately decreasing the efficiency of the economy.
Of course, nobody will tell you that you're paying this fee directly - all parties involved want to encourage your spending habits, of course - but you will. Usually by way of marked up retail prices and credit card fees baked in to your usage. Unfortunately, there's almost no way around this 'value-added' fee aside from simply stopping the usage of your credit card altogether. And for many people (and small businesses), doing so is unrealistic and somewhat untenable at scale.
Cryptocurrencies solve two of the classic economic problems: value-added fees and a lack of trust in centralized institutions. These problems have historically significantly impacted economic growth, and have led to large inefficiencies in wealth transfer. Such inefficiencies usually particularly impact people at lower income levels, leading to inequality and further strife.
One of the intrinsic values of modern cryptocurrencies is the fact that you can, theoretically, use it to purchase any good or service without incurring foreign exchange fees. Coins are transferred from one wallet to another, and (depending on the cryptographic architecture) the calculations involved in that transaction are usually distributed across the currently operating cryptocurrency processors on the Internet. Such processors are used to calculate the recipient, destination, and cryptographic hashes involved in updating the global ledger.
Naturally, this relieves a significant burden on centralized banking institutions, and would allow users not to have to pay outrageous credit card processing fees (like they have to with fiat currencies).
Additionally, cryptocurrency systems are designed to be decentralized instead of centralized. This means that there is no single institution in charge of regulating and verifying transactions, which results in a system where trust can be established between two parties without requiring an intermediary like PayPal or Visa to verify their transaction for them...
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