Is Crypto “A new Financial World Order”?

The concept of medium of exchange isn’t new. The need rose right from the Stone Age when the barter system existed. People had to sacrifice more to get less. So, the medium of exchange system was introduced to counter inaccuracies and inequalities in barter. Gold and silver coins were used for exchanging goods. Soon the world advanced and paper currency came into existence. However, the differences in the value of currencies prompted the need for the new financial world order – Cryptocurrency. Let’s delve deeper to find where digital currencies stand today.

Digital currencies

The concept of real cash is ancient. Each country has its own national currency. Governments control the printing and regulations of their currencies. However, the world of currencies is undergoing a drastic change. Today, the globe is entering a new phase of digital currencies. Here, the currency isn’t controlled by governments or individuals. It’s the market forces that dictate the price and demand of digital currencies.

The fall of paper currency

Money will drive the world as long as people make transactions and exchange services. So, money is here to stay until life exists. That being said, the nature and form of currency have changed with time. It’s currently passing through the biggest transformation in the form of cryptocurrency. So, what lead to this new financial world order? Back then, paper currency was valued in terms of gold. The tradition continued for centuries until the middle of the twentieth century. The greatest illusion of the world – cash – faced an unexpected change in its valuation. That actually triggered the need for an alternative currency. Until then, no one ever discussed digital currencies.

Change in the valuation method

The truth is people invest hours each day to earn cash. However, paper currency carries no intrinsic value today. Let’s understand this point with the evolution of the barter economy when the concept of the medium of exchange was introduced. During the seventh century BC, gold coins were used to replace goats, making barter a more convenient option. The Lydians imbued an object with a nominal value. People liked the concept which later evolved into paper bills and coins that we see today.

Of course, it’s easier to manage paper currency and coins rather than carrying a goat or other physical objects. Things were going smoothly up to 1971. The money story hit a turning point when its valuation method was changed forever. In 1971, American president Richard Nixon took the US dollar off the gold. He just hammered the final nail into the Bretton Woods system and turned the US dollar into a fiat currency. Consequently, the valuation of every other currency in the world also changed.

The value of the dollar was no longer to be measured in terms of gold. On the contrary, it was measured by laws, regulations, and governments. That was the first time when money parted from the physical system and became a belief system, decided by the governments. So, the need for the new financial world order was felt, which later gave birth to virtual currencies.

Volatility and people’s perceptions

Once the method of valuation changed, people lost faith in the real worth of currency. So, a new trend came into being. Most investors started putting their hard money in gold and other commodities. That further lead to the fall in paper currency and triggered a new cycle of disbelief in cash. People became more sceptical about hoarding real currency.

Depression and volatility added fuel to the fire. During the same period, economic uncertainties coupled with wars loomed at large. So, people started buying gold. As a result, the demand for currency fell all over the world. People no longer trusted fiat currency as a means of wealth. While fiat currency is still in circulation, individuals seek other alternatives. That’s where digital currency emerged as a new financial world order.

A significant number of individuals across the globe think that America was stupid to leave sizeable unpaid debt. Most of them thought that the game for the United States was over. Some experts even asserted a change in the new world order. They assumed that a new country might emerge as a global leader with a new hard currency. However, that was just a myth.

According to most experts, America wasn’t being stupid. Rather, it was looking for something innovative, something that might preserve its gold and currency value. The birth of the Internet is associated with this belief. Do you think that the super-power was fool enough to change the valuation method of its dollar? No way! Rather, the country was trying to free up its dollar from the pressure of gold. At the same time, many policymakers were instituting a strong medium of exchange – a new financial world order – behind closed doors.

During the 1940s when the Internet came into existence, America explored its potential for an alternative currency. When TVs were changed from analogue to digital sets, American thinkers were weighing their options to change paper currency to digital currency. They knew their plan for decades even before they transformed everything into digital. However, the world was unaware of this innovative change until now. Today, every other nation is embracing digital currency. Some nations are even planning to start their own virtual currency.

Loss of confidence in central banking systems

Today, central banking systems such as Federal Reserve have lost the confidence of people. The situation got aggravated with the world of Brexit and Trump. Plus, we live in an era where technological ceilings get shattered daily as consumer needs become convenience-oriented just like needs and wants. All these components have redefined the meaning of coins, wallets, and money, which are aligning with the virtual world.

This new world is programmable, digitized, and features a complex series of ones and zeros encrypted and stored in online databases. While it may appear complicated for a common man’s understanding, the biggest perk of digital currency is its decentralized nature. The programmable money decouples the need for big institutions from the network’s architecture. That pushes innovation in currency. Programmable money essentially democratizes money in real terms.

The rise of digital currency

Everybody has heard about cryptocurrencies. Yet, very few individuals know how they work or what they really are. The first digital currency Bitcoin was initiated by Satoshi Nakamoto in 2008. It’s the world’s most popular cryptocurrency that comes as a string of encrypted computer data. Most people use Bitcoin as their preferred crypto to make payments online. Let’s find out the reasons for the emergence of this new financial world order.

Safety and stability

It’s the most familiar peer-to-peer option to physical cash as well as bank accounts. Other than the security breach of 2011, Bitcoin is widely regarded as secure and stable. During the initial years of inception, the value of Bitcoin was nominal. Some sites offered Bitcoins free to users as a way to popularize them. Today, its value has skyrocketed thousand times. The truth is investors and experts consider Bitcoin as the most expensive asset that yields higher and stable returns.

Increase in value

The value of any cryptocurrency, including Bitcoin, Litecoin, Dogecoin, Ethereum, and Ripple, increases with time. The value of the physical currency, on the other hand, dwindles with time, thanks to inflation and other factors. Bitcoin and other cryptocurrencies elevate faster than inflation. For this reason, even conservative-minded retail investors prefer to hoard virtual currency instead of cash. They know that the worth of their money (in digital currency) will only increase. So, they don’t bother about wartime or other uncertainties. Even better, virtual currency is a means to invest. It replicates gold as hard cash. However, its value increases faster than gold. Plus, you can exchange crypto for cash at any online outlet in any part of the world. Such stability and ease of exchange drive users toward this new form of currency.

No exchange rate

Another reason why digital currency outsmarts traditional currency is the exchange rate. Let’s understand this point with a simple day to day example. If you live in India and buy a product online, you may have to pay in dollars. In case the value of the dollar is 74 INR, you may have to pay 74 INR plus 5 percent exchange rate and other taxes. The receiver, on the other hand, gets 1 dollar or 74 INR, nothing more. In the process, the five percent value goes to the currency converter or exchanger. So, the sender loses a great deal of money. Those who need to pay thousands of dollars for some reason end up paying hundreds of extra dollars to the exchanger. The status quo changes when you switch to virtual currency. There’s no need to pay the five percent exchange rate fee. You only pay digital currency worth one dollar plus a nominal transaction fee. The fee accounts for less than 1 percent. So, it’s a win-win situation for the sender. Even receivers get more money (due to zero tax) and more sales. So, the new financial world order of virtual currency is getting wider.

Storage options

When it comes to storing physical cash, you’ve three options. You may either hoard it at your house, in bills (securities), or at banks. Still, you run the risk of loss due to financial uncertainties or thefts. The situation is quite different in the case of cryptocurrencies. You can store your assets in three types of wallets – hardware wallet, software wallet, and cloud (online) wallet. Each type of wallet offers enhanced levels of security. So, your assets stay secure. Although there have been some instances of security breach in the past, most currencies now apply extra layers of security to deter hackers and intrusions. So, your money stays safe from the prying eyes of robbers.

Friction-less alternatives

Besides peer-to-peer currencies, other options also remove the friction of tackling physical money. Processing networks such as Apple Pay and PayPal are gaining popularity for embracing digital currency. Cryptocurrencies are also being widely used in third-world nations. So, the road for a new financial world order is only expanding.

Mobile payment apps

Take a look at underdeveloped countries like Sri Lanka or Bangladesh. Even they use mobile payment options. M-Pesa for example is largely used in Africa as the primary device for mobile phone payments. By 2011, M-Pesa (a mobile-based payment service) has transferred over 11 percent of Kenya’s GDP. The trend doesn’t look like easing anytime soon. On the contrary, other nations are joining hands for digital payments. That paves the path for the use of digital currency, especially for international payments.

Carrier billing is a fantastic example where digital currency is used for payments. It connects your mobile phone to an online account. Using the service, you can book a hotel with your mobile number instead of
your credit card. The use of the Swish app for transferring money across the globe is another worth mentioning example.

Corporate value currencies

Besides mobile-friendly payment systems, you’ll find many corporate value currencies. Various companies have integrated those currencies into their development for payments and receipts. Value is derived and determined from what customers get from the services and products the company provides. The whole calculation doesn’t involve legal tender. If you take a closer look, companies intend to offer incentives as a way to encourage prospects to buy their products without paying extra for the exchange rate. Instead, buyers enjoy incentives.

The gaming currency

The gaming industry has seen a massive surge in the usage of cryptocurrency. Games such as World of Warcraft have players spending hours on performing missions to collect adequate virtual gold to enrich their characters. Eventually, they could sell their avatars in exchange for physical currency.

In 2009 alone, this type of gold farming made 3 billion in real-life dollars, demonstrating that virtual currencies can’t be ignored by anyone. Linden Lab’s Second Life gaming is another example that made around 144 million dollars by the end of 2009. The amount is more than the GDP of 19 countries. Those figures describe why digital currency has become a new financial world order.

Conclusion

Of course, many scams run in the name of digital currencies. However, diligence and patience can help you stay clear of any get-rich-quick-scheme associated with virtual currency. A quick scan of reviews (about any virtual currency) should also come in handy.

Digital currency is the present and future of the planet. The truth is crypto has already become the new financial world order. From payments to purchases and everything within, cryptocurrencies are all set to replace physical money soon. So, don’t get left out. Join the new force of genuine currency world and make a difference.

New Financial World Order!