Cryptocurrency is one of the fastest-growing innovation sectors in the world of finance. Beginning with Bitcoin in 2009, the asset class has since grown to become a lush ecosystem of different platforms aimed at decentralizing finance and bringing an overall greater financial experience to individuals across the globe.
While many newcomers have embraced the movement with open arms, cryptocurrency has understandably drawn a lot of questions by those who have put the asset class under a microscope. For any emerging technology, however, it is important and encouraged for skeptics to look closely and scrutinize the industry. In the case of crypto, heavy scrutiny can weed out the useful innovation from the useless and leave the world with advanced and fine-tuned platforms for conducting financial services.
With that being said, let’s take a look at 10 different ways in which crypto can change the world for the better.
10 Ways Crypto Will Make the World Better
There are a countless number of proposed solutions to financial problems being addressed by different cryptocurrencies. While some protocols are simply creating new problems to offer a solution for, these 11 innovations could prove to be truly impactful in making the financial world a more fair and inclusive space:
1. Help Prevent Fraud
Being built on blockchain technology, cryptocurrency offers much greater transparency than the legacy financial system. It utilizes what’s known as distributed ledger technology (DLT) to keep public records of all transactions. In addition to transparency, blockchains are also immutable, meaning that transactions cannot be deleted or altered unless network participants agree to change the record through a process called consensus.
A lot of popular blockchains are permissionless so that anyone around the world can access the protocol with just an internet connection, however, some blockchains are permissioned, and for good reason — they limit who can participate on the platform by requiring an invitation to be validated for contribution on the network. This can help reduce fraud by restricting bad actors from gaining access to a business’s confidential data.
Fraud has plagued companies and financial institutions countless times due to human malpractice. With a crypto-enabled monetary standard, the transparent nature of DLT allows for anyone with access to the internet the ability to trace transactions and money flow. When you “open the doors” for others to see, it ensures that the money flows in the way it’s intended.
So not only will cryptocurrency change the world by providing that much-needed check and balance on more powerful institutions, but it will reward and thus foster more honest and transparent organizations.
2. Improving Payments
Another way in which cryptocurrency can impact the world is by drastically improving payments. One of the primary reasons why Bitcoin and the crypto asset class were developed was to create a better payment experience for everyone. As the current monetary system stands, all day-to-day transactions are processed through a select few payment processing companies, such as Visa, Mastercard, and the like. While these companies provide us with instant settlement and payment security, these benefits come with a cost: transaction fees. These payment processors take a small percentage cut of every transaction for facilitating the payment; but what if we never had to worry about transaction fees in the first place?
This was a key innovation discovered by Bitcoin: facilitating instantaneous payments while providing total security, without any sort of intermediary required. Crypto has since grown to utilize this innovation in all sorts of various decentralized finance (DeFi) protocols, but today this innovation is being used in the real world through Bitcoin’s Lightning Network and other crypto payment platforms like Solana Pay.
3. Seamless Money Transferring
Along with nearly instant and secure payments, cryptocurrency enables instant money transferring across the globe. The current financial system requires money to be routed through banks and other financial institutions like Western Union to get money from one country to the next. For example,“If someone working overseas had to send money to their family back in their home country, they probably need to use a money transfer intermediary who takes a percentage of the transaction. This process not only can take several days but also is expensive.
Meanwhile, crypto enables users to send money across the globe instantly. By decentralizing the routing infrastructure across the globe, transferring money can now be done without any sort of intermediary while at the same time ensuring security.
What the internet did for communications is what crypto is doing for money transferring – making it faster, cheaper, and more efficient than ever before.
4. Increasing Crowdfunding
Cryptocurrency revolutionizes crowdfunding by making donations easier than ever before. With the ease of money transferring enabled by crypto, individuals looking to raise money for any given project or cause can reach out to a global audience rather than relying on a few key investors. By posting a blockchain address online, users can seamlessly send money to the address with any amount, free of any charge or intermediary fees. This not only reduces risk for the participants involved but also therefore encourages greater participation.
This phenomenon was demonstrated globally in February of this year after Russia invaded Ukraine. The official Ukraine Twitter account posted Bitcoin and Ethereum addresses as a plea for cryptocurrency donations to support their efforts.
FTX got involved by helping convert donations into fiat for deposit at the National Bank of Ukraine. CEO Sam Bankman-Fried also gave $25 to every Ukrainian FTX user.
5. Bolstering Financial Security
Due to its decentralized nature, hacking a blockchain is much more difficult than hacking traditional centralized entities. HTTPS, the primary internet communication protocol, is decentralized and therefore incredibly difficult to hack. Bad actors would have to take control of the majority of the computer network’s nodes across the world to manipulate it. Such a feat is essentially impossible with today’s technology.
This doesn’t mean that individual websites on the internet can’t be hacked. Major entities such as Facebook have experienced numerous data leaks, but that is because Facebook stores its own company’s data in Hive, its centralized data warehouse.
The distinction lies in that the internet itself, the global foundation in which companies build on top of, that is secure and cannot be tampered with.
Cryptocurrency is designed in the same way, except that blockchain protocols can host financial data as opposed to informational data on the internet. Building a financial system on top of cryptocurrency’s decentralized infrastructure, therefore, is much more secure than relying on centralized sources, like a bank vault, for financial security.
6. Strengthening E-Commerce and Supporting Small Businesses
Being native to the internet, cryptocurrency will change the world of e-commerce by helping prevent fraud and therefore reduce the risks for buyers, sellers, and vendors. It offers a more secure foundation to conduct online business and also enables global commerce. By enabling monetary transactions on a global scale, this opens the doors for world-wide business to flourish.
This improvement of e-commerce trade also makes it easier for small businesses to thrive in an increasingly online world. Since cryptocurrency is a global market, small businesses with an online presence can tap into a much larger potential customer base by offering an alternate payment method for their products in more countries.
7. 24/7 Markets
Traditional financial markets like the NYSE, Nasdaq and London Stock Exchange only run during weekdays and are normally open between 9:30am-4:00pm. Compare this to the crypto markets, which operate 24 hours, seven days per week, and you can clearly see how these markets allow for much greater participation.
8. Fostering Scientific Advancement
Cryptocurrency’s decentralized nature allows for individuals across the globe to participate regardless of geographic location. As long as there is internet connection, people can use cryptocurrency. This infrastructure, in many cases, eliminates the need for major institutions and corporations to withhold information for research. Crypto gives everyone real-time access to data and interconnects the world to conduct research on a global scale.
When trying to come up with cures for diseases, for example, having the capacity to use the world’s collective resources as opposed to a few, more localized entities can spearhead faster and more effective research.
9. Hedging Against Inflation
Fiat currencies are the primary means of spending across the globe in today’s financial landscape. One of the most impactful ways that cryptocurrency will change the world is by offering a solution to fiat currency’s inherent problem: inflation. Over time, our currencies are devalued as the money supply increases – some countries are facing double, triple, and even quadruple digit inflation. This is why hard assets like gold and real estate cost more over time, because they retain their value relative to a devaluing currency.
Unfortunately, conducting day-to-day payments with assets like gold or real estate is simply infeasible and impractical. That’s why we developed faster mediums of exchange with fiat currency.
Cryptocurrency offers individuals around the world the opportunity to access alternatives to fiat currencies that enjoy the value retention of hard assets like gold while also allowing them to be used for secure and trustless payments thanks to their digital and decentralized nature.
In a world becoming increasingly digital, the need for digitally native currencies is growing in tandem. Cryptocurrency adoption is growing right alongside the rate of internet adoption around the world. Research from Wells Fargo suggests that cryptocurrency adoption is mimicking that of the internet in the 1990s and suggests that the asset class “appears that cryptocurrency use today may even be a little ahead of the mid-to-late 1990s internet.”
10. Giving Financial Control Back to the People
Most importantly, crypto will bring ownership of money back to the people. What cryptocurrency solves is the problem of trust. Currently, everyone’s money lies in the hands of our monetary institutions, and we place that trust in them to secure our money. However, history has shown countless times that this trust has been broken, thus raising the question as to whether that trust can always be restored.
Cryptocurrency removes that need for trust entirely, enabling users to act as their own bank and secure their own funds if they so choose without the need for an intermediary.
What Could Go Wrong?
Despite all the promising innovation being fervently worked on under the hood, there are still roadblocks ahead which could undermine the mainstream adoption and integration of cryptocurrency into the financial system.
- Regulatory Headwinds: Being such a nascent sector, cryptocurrencies still largely operate unregulated by major financial institutions. If legislators across the globe decided to crack down on the asset class, it would create a difficult environment for cryptocurrency to achieve mainstream adoption.
- Technological Failures: One of the primary bridges between cryptocurrencies and the legacy financial system are stablecoins – digital fiat currencies that live on a blockchain. As crypto grows, there is more pressure placed on stablecoin providers to secure the stability of the crypto ecosystem. If the technology behind a heavily relied-upon stablecoin, such as USDC or USDT, were to break in some fashion, it could be catastrophic to the crypto markets as cryptocurrencies lose their link to the traditional financial system. However, this risk should be taken with a grain of salt, as the same principle applies to all kinds of different technologies that we rely upon on a daily basis. As technology improves, so can our trust in these systems to work as intended.
- Fear of Attacks: As was the case with the emerging internet, the crypto space is rife with scams and bad actors looking to take advantage of newcomers to the space. There are consistent hacks, scams, and attacks on various blockchains that may drive adoption away if these problems are unable to be addressed. People fear that 51% network attacks could put their data at risk, and with little regulation in place, there’s no certain way to ease those concerns. This is why proper regulation for the crypto industry is actually a good thing, as it can instill greater confidence from the public in the technology being developed in the space. In order to keep yourself protected from scams, the best thing you can do is take the time to do your own research to avoid these potential pitfalls.
- Scalability Problems: One of the key components of achieving widespread usage of cryptocurrencies is scalability. Mainstream payment networks are able to handle millions of transactions every day, but this scalability comes at a cost: centralization. Decentralized networks like Bitcoin and Ethereum are attempting to provide that same level of scalability while at the same time remaining decentralized. Though improvements are being developed and implemented, such as Bitcoin’s Lightning Network and the Ethereum proof-of-stake merge, failures in these scalability upgrades could hinder cryptocurrency’s ability to bring in the billions of users it hopes to attract. There are other blockchains like Solana which can process 50K+ transactions per second (TPS) which is closer to achieving the levels traditional credit cards can achieve.
Though there are potential roadblocks to reaching mainstream adoption of cryptocurrency, regulators and blockchain developers alike are working every day to create a positive environment for crypto adoption. Bitcoin laid down the path for crypto’s integration into the global financial system, it’s just a matter of keeping the path clear for the asset class to keep it moving forward.
Learning More About Crypto
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