If we already have traditional money like the fiat that we know today, why do we still need to look for other stores of value and means of exchange? Why use cryptocurrency?
For those who are confident enough of the traditional financial institutions, they doubt the effectiveness, stability, and reliability of cryptocurrencies. Most of them would question if there is such a thing as a legitimate cryptocurrency value. They hardly accept the possibility of the independent ownership of financial resources without the centralized authority of banks.
Although there are people who are against the use of digital currencies, there are still those who promote its adoption because of the many advantages of cryptocurrencies.
Financial Inclusion - Giving Chance to the Unbanked
As The World Bank reveals, there are over 1.7 billion adults who do not have access to financial services offered by the banks. Asian and African countries are among those that experience the worst when it comes to banking services. In China alone, there are over 200 million people who have no bank accounts yet.
Because of the inequality of access to banking services, there are a lot who cannot enjoy the same privileges as those who are given a chance to be included in the traditional financial system. People without banks are in danger of losing their income and savings because of environmental factors such as emergencies and disasters or human factors such as theft and robbery. Investment, credit, and business growth opportunities are also taken away from these people just because they cannot access the services offered by such financial institutions.
As Fox Business asserts, it would be much easier to offer cryptocurrency use to the unbanked because more people have access to the internet than they have to banks. The underprivileged and marginalized sectors usually cannot meet the requirements set by banks, such as minimum amounts for opening an account, complex identification proofs, and so much more.
If the unbanked will be given equal access to financial systems, then it could potentially reduce poverty on a global scale. Cryptocurrency research points to the effectiveness and efficiency of the use of financial technology to promote equitable and fairer access to wealth.
Assurance in Individual Ownership
With the current state of financial institutions, account holders essentially allow banks to take stewardship of their assets. This puts them at a lot of risks because much power is given to banking institutions. As Finjan asserts, “Accounts may be closed without notice for infringements of a financial institution’s terms of service - requiring you as the account holder to jump through hoops in order to get yourself back into the system.”
Since cryptocurrencies do not depend on any centralized authority such as the bank, you can take control of your asset ownership. You become the sole owner of your digital assets and are responsible for both the private and public encryption keys that make up your cryptocurrency network address.
The blockchain technology that underpins the system of cryptocurrencies also allows for greater confidentiality and security. Since policies are hardcoded in the network, it cannot be manipulated just to suit the agenda of banking officials, government institutions, and other financial entities.
Prevents Fraudulent Transactions
The use of credit cards has long been the cause of worry of most people because of the many credit-card-related frauds happening around the world. Whenever you use your credit card to pay a particular merchant, you need to give them your trust that only the right amount will be pulled from your account and that your personal details won’t be maliciously stored for illegitimate uses. Paying through credit cards is also like giving merchants permission to access your full credit line even if you are paying only a little amount for a cup of coffee or a piece of cake.
As Blockgeeks explains, “Credit cards operate on a “pull” basis, where the store initiates the payment and pulls the designated amount from your account. Cryptocurrency uses a “push” mechanism that allows the cryptocurrency holder to send exactly what he or she wants to the merchant or recipient with no further information.” This eliminates the chance for identity theft.
Cryptocurrency transfers are also irreversible, unlike credit card transactions which can be reversed in cases when charge-back transactions are allowed. Ultimately, since cryptocurrencies are dependent on a secure encryption technique used in blockchain technology, user safety, and fund security become of paramount importance.
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