Cryptocurrency is a hot topic and a crucial one in today’s economy. It redefined the global economy in ways even the best experts didn’t foresee. It’s now known to everyone, and major tokens like BTC or ETH have become more critical in the market than in some industries.
Yet, this adoption was never guaranteed, and it’s somewhat of a miracle that crypto is what it is today. There are numerous reasons for this unprecedented success. It’s especially impressive for something so many people still fail to understand.
A Success Explained By Crypto Tech
There are several factors that explain the success (and failure) of the countless cryptocurrencies out there. Yet it’s the tech behind virtual currencies that played a significant part in their quick and massive adoption around the world. People well-versed in financial technology rapidly realized the potential of a digital currency with a decentralized architecture.
The concept of Blockchain, although still misunderstood by many, is central. The Blockchain is a public and immutable ledger used to track transactions and assets recorded on the network. It allows cryptocurrencies to have some features that a fiat currency doesn’t provide.
Transparency
The distributed ledger’s public nature means that transactions and other data linked to the token’s activity are accessible to all. All participants in a transaction get the same information at the same time. Moreover, the record can’t be altered, and everything is precisely time-stamped.
This means that the possibility of fraud becomes less likely for people and organizations.
Furthermore, brute-forcing its way into the Blockchain by hacking it is an extremely difficult task. So, for now, transparency is guaranteed. This could change in the future when a genius hacker finds a weakness. As of today, current tech knowledge doesn’t allow it in a feasible way.
Increased Security
Blockchain security is one of the most discussed features. The decentralized nature of the Blockchain means that no one has full authority over it. At least, not in a way that can alter other participants’ assets. However, it doesn’t mean it’s foolproof. Since the network is so secure, hackers can use the weakest link of the chain, which is the human component.
Phishing is one of the preferred tactics, and it can quickly give access. So, even if the network provides the best security measures known to date, someone with assets giving, inadvertently or not, access to another person takes a risk.
Speed and Efficiency
The usual transaction process everybody goes through with a bank can be a hassle. It relies on third-party mediation and the approval of this central authority. Moreover, it’s prone to human error. It also involves several time-consuming processes accomplished on business days only.
Blockchain networks provide a unified ledger. It’s able to store the required documentation alongside transaction details. It does all that automatically without requiring an administrative authority to review and approve the operation.
That’s what made Smart Contracts possible. The creator of the contract can put pre-specified conditions in it. When met, these conditions will then allow the network to trigger the next step without a human behind it giving the “go”. It can be great for a business handling claims, and it’s also used for crypto games.
Bad Publicity and Scandals
Even though cryptocurrencies have completely redefined major aspects of the economy, theory must be distinguished from execution. Bitcoin and Ethereum have been staples of the market. It’s all thanks to great handling of the project, a strong community, and smart expansion strategies.
However, not every crypto project turned out as successful. Cryptocurrencies are built around a community. They support the token and help the ecosystem live until it, eventually, gets to fruition. Unfortunately, many crypto projects have been destroyed by fraud, and others simply weren’t solid enough to withstand the volatility of the market.
The instability of the market is primarily due to the absence of backing reserves and price stabilization mechanisms. From the public’s point of view, it creates uncertainty, and it has put brakes on the spread of cryptocurrencies.
Volatility Prevents Everyday Adoption
The general public isn’t very familiar with the inner workings of cryptos, but given the right tools, it could have adopted crypto. Even if crypto is convenient to use and offers seamless transactions, the volatility can be scary compared to the stability of fiats.
Because of this, users can’t immediately price it and use it for daily transactions as easily as Euros or US dollars. Considering there are countless different tokens, each with specificities, it becomes hard to market it as the new type of currency everyone should use daily. Thankfully, it’s still a very young market with opportunities to evolve.
Can Crypto Take Over The World?
In a sense, the hype surrounding cryptocurrencies means they already had a significant impact on our society. However, there’s still a long road ahead to make it a lasting solution and viable economic alternative.
It faces many challenges that prevent it from mass adoption. Namely, its volatility and a few rotten eggs creating negative publicity.
