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The 20 Benefits of Cryptocurrency You Need to Know (in 2022)

Knowledge Crunch | Friday, December 10, 2021 5:40 PM GMT

While initially many were sceptical about digital assets competing with traditional fiat currencies, cryptocurrencies have become increasingly common. Understanding where cryptocurrencies came from and how they interact with modern banking is essential if anyone is looking to keep their money safe and sound in the coming years.

In this article, we’ll be looking at the more positive aspects and advantages of cryptocurrency, and considering the plus points that make digital currency a workable alternative to more established forms of financial trade.

 

 

 

 

Table of Contents

 

What is Cryptocurrency?

 

Benefits of Cryptocurrency in Business

 

Benefits of Cryptocurrency Trading

 

Benefits of Cryptocurrency on the Economy

 

Benefits of Cryptocurrency for Society

 

 

 

 

 

 

What is Cryptocurrency?

Cryptocurrency is decentralized digital money, based on blockchain technology. You may be familiar with the most popular versions, Bitcoin, Ethereum (ether), Solana and Cardano but there are more than 15,000 different cryptocurrencies in circulation (at the time of writing).

Unlike the U.S. Dollar or the Euro, there is no central authority that manages and maintains the value of a cryptocurrency. Instead, these tasks are broadly distributed among a cryptocurrency’s users via the internet.

The anonymous creator of Bitcoin, Satoshi Nakomoto, said in what came to be called the Bitcoin White Paper that he wanted to create a peer-to-peer electronic cash system, meaning that you could instantly send money to someone else (just like PayPal, but cutting out the middleman). The idea was that eliminating banks and brokers from the equation could reduce fees and allow senders and receivers to keep the exchange confidential.

In addition to avoiding banks, many fans of cryptocurrency see it as a new way to fight corrupt and oppressive governments, as it aims to remove governments from financial transactions completely by operating anonymously. It’s certainly shown its use. For example, Venezuelans have turned to crypto as they face hyperinflation and an economic crisis.

Ideally, it requires nothing more than an Internet connection and KYC documents to start trading cryptocurrency, making it different from opening an account at a traditional bank (think about how much information you need to provide to get a credit card).

 

 

5 Benefits of Cryptocurrency in Business

The cryptocurrency market has evolved dramatically over the past few years. While many businesses such as Amazon have started accepting Bitcoin payments for their products and services, most of them are still relying on fiat currency payments. Most entrepreneurs don’t see the need for taking up Bitcoin, and few of them truly know how it operates and whether it is as safe as conventional methods.

Below, we discuss five straightforward ways businesses can use cryptocurrencies to accelerate their progress over their competitors.

 

Source: Pixabay

Reducing corruption

As with the Sword of Damocles, great power comes with great responsibility.  When you give a ton of power to only one person or entity, the chances of them abusing that power increases. Cryptocurrencies aim to resolve that issue of absolute power by distributing power equally among many people or, better yet, among all the members of the network such as businesses.

Cutting out the middleman

With traditional money, every time you make a transfer, a middleman like your bank, wire transfers or a digital payment service takes a cut. With cryptocurrencies, all the network members in the blockchain are middlemen; their compensation is formulated differently from that of fiat money middlemen’s and therefore is minimal in comparison.

Exponential Industry Growth

The cryptocurrency industry has been one of the fastest-growing markets that most of us have seen in our lifetimes. Being involved now might reasonably be compared to being involved with companies on the leading edge of the internet back in the 1990s and early 2000s.

The total market cap of the cryptocurrency market in 2013 was about $1.6 billion. By June 2021, it rose to over $1.4 trillion.

A More Inclusive Financial System

Some of the benefits of cryptocurrency extend to people who don’t have access to the traditional financial system. Due to its decentralized and permission-less nature, one of the benefits of cryptocurrency is that anyone can participate. This provides more opportunities, more financial services and exposure for businesses.

Easy Transactions

Crypto transactions can be made easily, at low cost, and in a manner more private than most other transactions. Using a simple smartphone app, hardware wallet, or exchange wallet, anyone can send and receive a variety of cryptocurrencies.

Some types of cryptocurrencies, including Bitcoin, Litecoin, and Ethereum, can be bought with cash at a Bitcoin ATM. A bank account isn’t always required to use crypto. Someone could buy bitcoin at an ATM using cash then send those coins to their phone.








5 Benefits of Cryptocurrency Trading

The price of one bitcoin in US dollars quadrupled last year, gaining over 160% in Q4 alone. This meteoric rise sparked widespread media and investor interest in bitcoin specifically and in cryptocurrencies more generally. Moreover, many payment platforms such as BitPay, Square and PayPal have started accepting payments in bitcoin and other cryptocurrencies. 

It is also becoming easier to trade cryptocurrencies on established platforms. Here, we look at some of the potential benefits of cryptocurrency trading

Source: Pixabay

24/7 Market 

The cryptocurrency market is usually available to trade 24 hours a day, seven days a week because there is no centralized governance of the market. Cryptocurrency transactions take place directly between individuals, on cryptocurrency exchanges all over the world. 

Volatility

Although the cryptocurrency market is a relatively new technology, it has experienced significant volatility due to huge amounts of short-term speculative interest. The volatility of cryptocurrencies is part of what makes this market so exciting. Rapid intraday price movements can provide a range of opportunities to traders to go long and short but also come with increased risk.

Going long or short

When you buy a cryptocurrency, you are purchasing the asset upfront in the hope that it increases in value. But when you trade on the price of a cryptocurrency, you can take advantage of markets that are falling in price, as well as rising.

Portfolio Diversification

Cryptocurrency has become known as a non-correlated asset class. Crypto markets largely function independently of other markets, and their price action tends to be determined by factors other than those affecting stocks, bonds, and commodities.

Outsized Returns

It’s no secret that Bitcoin has been the best-performing/trending asset of the last 12 years. When it began in 2009, Bitcoin essentially had no value. In the following years, it would rise to a fraction of a penny and then eventually to tens of thousands of dollars. 

A memorable story of this would be the Bitcoin pizza story, a man in Florida convinced a pizza courier to pay 10,000 Bitcoins for two Papa John's pizzas. Unknowingly they became the first people to use Bitcoin in a commercial transaction.  Because of this, every May 22 is annually known as Bitcoin Pizza Day. 

Fun Fact: On the 11th anniversary of Bitcoin Pizza Day in 2021, The price of Bitcoin reached a high of $63,000. So, those two pizzas would be worth $630 million (plus a good tip).









5 Benefits of Cryptocurrency for the Economy

Cryptocurrency provides many incentives for entrepreneurs across the globe. It has made it easier for entrepreneurs to reach international markets rather than strictly sticking to the national markets. This has allowed sellers to create relationships and foster trusts with markets never before available and has been fantastic for developing nations. 

Here, we look at some of the potential benefits of cryptocurrency trading for economies.

Source: Pixabay

Accessibility and Liquidity

A major benefit to cryptocurrency is that it’s very accessible and versatile. Since it only takes a few minutes to transfer crypto to another user, it can be used to purchase goods and services from the ever-growing list of places accepting it. This makes spending money in another country and exchanged for other currencies easier, with the bonus of having little to no fees applied. Bitcoin for example can also be easily sold to a currency exchange at any moment and at any time.

Transparency 

Every cryptocurrency transaction is recorded in a public list called the blockchain, which is the technology that enables its existence. This makes it possible to trace the history of Bitcoins to digital wallets and stops people from spending coins they do not own, making copies or undoing transactions.

Less Government Control & More User Autonomy

Conventional fiat currencies are subject to multiple regulatory restrictions and risks. Banks are vulnerable to boom and bust cycles in the economy.  Theoretically, at least, crypto promises user autonomy because its price is not linked to specific government or regulators policies. This means that users and owners of the cryptocurrency are in control of their money.

No-Risk of Charge-backs

Once a cryptocurrency is sent, the transaction cannot be reversed. Since the ownership address of cryptocurrency will be changed to the new owner, once it is changed, it is impossible to revert. Since only the new owner has the associated private key, only he/she can change ownership of the coins. This ensures that there is no risk involved when receiving cryptocurrency.

Decentralized

A major pro of cryptocurrencies is that they are mainly decentralized. A lot of cryptocurrencies are controlled by the developers using it and the people who have a significant amount of the coin, or by an organization to develop it before it is released into the market.

The decentralization helps keep the currency monopoly free and in check so that no one organization can determine the flow and the value of the coin, which, in turn, will keep it stable and secure, unlike fiat currencies which are controlled by the government.

 

 

 

 

 

5 Benefits of Cryptocurrency for Society

The truth is that Bitcoin is a popular topic. Most people see it as a phenomenon with great relevance. And most individuals are waiting for their present leaders to direct them regarding the future of cryptocurrencies like Bitcoin.

Most cryptocurrencies use blockchain technology and this is an innovation that can help deal with ills that affect current society. With this technology, the vision should be that humanity can easily manage and access information about money.

Here, we put forward five ways that society can benefit from the use of cryptocurrencies for everyday use.

Source: Pixabay

Giving people charge of their own money

With cryptocurrencies, you and only you have access to your funds. With traditional cash, you’re basically giving away all your control to central banks and the government and it isn’t “your money”. If you trust your government, that’s great, but keep in mind that at any point, your government can simply freeze your bank account and deny your access to your funds. 

For example, in the United States, if you don’t have a legal will and own a business, the government has the right to all your assets if you pass away.

Simplified cross-border transactions

In the digital era, you may think that businesses can sell to anyone they wish regardless of their geographical location. Unfortunately, there are still many barriers, and the high cost of processing payments is undoubtedly among the most notable ones.

Cryptocurrencies make it possible to trade internationally without having to part with a chunk of your profit or overpricing your product and eliminating transaction fees. Note that the value of Bitcoin anywhere in the world is the same, and a lack of middlemen makes transactions quicker and less costly.

Eliminating extreme money printing

By printing more money, a government may be able to bail out debt or devalue its currency. However, this approach is like putting a bandage on a broken leg. Not only does it rarely solve the problem, but the negative side effects also can sometimes surpass the original issue. Most cryptocurrencies have a limited, set amount of coins available. When all those coins are in circulation, a central entity or the company behind the blockchain has no easy way to simply create more coins or add on to its supply.

Incredible Security

Because they are based on cryptography and blockchain security, decentralized cryptocurrencies tend to make for secure forms of payment. This might be one of the most certain benefits of cryptocurrency.

Crypto cybersecurity is determined in large part by hash rate. The higher the hash rate, the more computing power it would take to compromise the network.  Making identity theft and hacks by hackers impossible.

Bitcoin is the most secure cryptocurrency, having the highest hash rate of any network by far.

Payments are mobile

As with many online payment systems, crypto users can pay for their coins anywhere that they have Internet access and a device such as a mobile phone. This means that purchasers do not have to travel to a bank or a store to buy a product. However, unlike online payments made with U.S. bank accounts or credit cards, personal information is not necessary to complete any transaction.

 

 

 

 

 

Now Over to You

The above are just a few of the most important advantages of cryptocurrency. Of course, there are potential flaws as well as its volatility being a major downside. As with anything, those interested in buying, selling, and trading crypto would be wise to do their research before getting involved in the crypto market.

We hope you enjoyed this edition of the knowledge crunch blog just as much as we enjoy writing them! Stay tuned for more and be sure to check out our other helpful blogs with advice and tips to reach your investment goals with ZuluTrade. 

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