Cryptocurrencies: The 21st Century's Ultimate Asset Class
We have witnessed a dramatic evolution in the way we exchange goods and services through the development of money throughout history. Before the widespread use of gold and silver, barter systems were used to exchange items for one another. Due to their rarity and expensive mining process, precious metals are regarded as valuable. In the early 20th century, citizens got tired of carrying gold in their pockets and moved to paper money backed by gold. The public accepted this movement as a valid method of payment and considered it permissible.
How did things turn out? There has been further evolution of checks as they have become instruments that represent cash deposited in a bank account that is kept in a centralized, digital ledger. The advent of credit and debit cards marked the end of the era of checks, as they were slow, inefficient, and petty payment methods. Consumers became accustomed to swiping their cards for convenience's sake; however, this contributed to the accumulation of mounting debt, each with a significantly higher interest rate than before.
With the advancement of technology, money has changed its form over the years and is now almost entirely digital. Rather than whipping out a credit or debit card at the gas pump, shuggling around cash has become increasingly frustrating. With the introduction of Apple Pay and Google Pay, mobile payments have become even simpler for the average mobile user. In addition, paper cash is highly contaminated and could belong to a wide variety of bacteria, thereby contributing to the spread of diseases and illnesses. Inflation rates are often attributed to the growing supply of cash.
3rd-party services such as PayPal, Zelle, and Venmo have become popular as the internet has become increasingly trusted. Taking a look at the present day of 2022, cryptocurrency has been around for 13 years, a relatively short period of time. It is important to note that cryptocurrency, or crypto for short, is not only the next evolution in money, but also in conventional asset classes as well.
Introducing a new asset class
The majority of existing investment vehicles in the world are stocks, bonds, real estate, commodities, and futures. Cryptography was officially introduced to the world in 2009 with Bitcoin serving as the first system to use cryptography as a peer-to-peer digital payment method, ushering in an exciting and unique new industry that is taking the world by storm.
Cryptocurrencies were created for the internet, on the internet. In this sense, it may be viewed as a form of alternative currency that is independent of any central authority. Money forms that are traditional, such as cash and checks, are not compatible with the devices that are used today, such as cell phones, computers, tablets. For a moment, consider the situation of sitting inside a new Tesla vehicle and being forced to insert cash into the dashboard in order to purchase an application.
As we live in highly advanced times, we can experience rich, immersive experiences such as we have never seen before because of the development of the metaverse that utilizes both virtual and augmented reality to merge the physical and virtual worlds. NFTs represent physical assets and are secured on the blockchain, turning everything and anything into a digital asset. A reorganization of the payment rails is underway in order to accommodate humans in these virtual spaces.
During the introduction of the automobile, there were no concrete roads available to drive on, only dirt roads. Travel was primarily accomplished by horseback at that time. If you are riding your horse on a dirt road and a motorized vehicle zooms past at top speed, it is likely that mud will be thrown into your face. It was necessary to rebuild or restructure the transportation rails, or concrete roads, to enable the automobile to take precedence over horse-drawn transportation. The process of designing a new system from the ground up was not an easy task, especially when many people did not see the value in owning a vehicle immediately due to the high cost, the noise, and the inefficiency of the fuel economy.
The birth of a new industry
It is important to emphasize that cryptocurrency is not only used as a means of transferring value, i.e. money, but that the technology underpinning it can and is being utilized to create a totally new industry known as decentralized finance, or DeFi. As the DeFi industry continues to grow, you will be able to manage, store, trade, and stake your digital currencies without the involvement of any government or third party.
As Ethereum has grown in popularity since 2015, programmable code has opened the door to the creation of if/then statements, which are known as smart contracts, that can be created and executed by one or more parties. ETH developers created a network using the same consensus mechanism as Bitcoin while also allowing the creation of programmable assets such as dApps and tokens.
The Ethereum network is one of the most popular and exciting networks in 2022 and beyond, despite some network slowdowns and higher gas fees than expected.
Despite the advancement of blockchain and crypto technologies, we continue to hold onto old asset classes such as stocks and bonds. There is no change to the basic concept of cash, as cryptocurrencies can be readily accepted as a medium of exchange, but are executed at a very high level, without the reliance on centralized agencies to ensure the legitimacy of transactions.
At present, there are thousands of cryptocurrencies in the cryptocurrency asset class, with a market capitalization of close to $1 trillion. The sole crypto currency back in 2009 was Bitcoin, which could be mined with a laptop computer for pennies per block. The mining network today is protected by thousands of specialized power computers that work to ensure the legitimacy of each transaction that is signed. In this new industry, traditional finance companies have realized the potential and are positioning themselves strategically. Examples include Goldman Sachs and Robinhood.
Towards a 21st Century Future of Cryptocurrencies
The future of cryptocurrency looks bright in the coming years. Occasionally, the market experiences swings, as with any financial market. Cryptocurrencies are not immune to downturns in which investors may lose their funds if they are not prudent in their decisions. A new asset class, such as cryptocurrency, should be carefully considered before investing.
Liquidity pools are generally considered to be less volatile than other investment vehicles.
Since most people entering the crypto space are not yet skilled at trading assets on exchanges, automated services such as Intelfin's products manage cryptocurrency portfolios 24/7, taking advantage of market volatility. Traditionally, an investment advisor manages your account and manages your stock trading. As a result of cryptography, these types of services can work even while you are asleep.
Cryptocurrency is becoming more popular as various applications make it easier to use and gain access to it. One such company is Solana, which recently released a new cryptocurrency mobile phone with a built-in wallet as well as a dApp/NFT store. Blockchain technology and cryptocurrencies facilitate the development of entire ecosystems based on fascinating ideas and concepts that are based on blockchain technology.
In the coming years, the crypto sector will undergo tremendous innovation as institutional interest and funding become more prevalent, allowing users to earn, collect, and swap tokens while engaging in activities they are interested in. With the advent of artificial intelligence, virtual reality, and augmented reality, cryptocurrency will be utilized in entirely new ways that have not yet been conceptualized. Web 3.0, the next generation of internet technology, allows users to regain control over their assets and data instead of being controlled by large corporations. Developers are hard at work creating the future of the internet, which will be known as Web 3.0.
Investing in the ultimate asset class
Cryptocurrencies may prove to be not only one of the most important asset classes for the 21st century, but may also become the largest asset class of all time. As the world continues to push the boundaries of digital technology, this could be the greatest opportunity the world has ever experienced. It is estimated that only about 5% of the global population is familiar with cryptocurrencies. However, technology improvements and a need to rethink the entire financial system have enabled them to make significant progress in this short period of time. A new era in money has begun... your only responsibility is to take the next step.