Modern finance industry and money itself is indeed broken, manipulated and debased by governments and banks.
How does cryptocurrency resolve these issues?
What makes it different from the government and bank debased fiat money?
What is trustlessness?
In the case of fiat, you need to trust a third party to guarantee the value of your money by not debasing it.
Considering the fact that the bank is lending your money to the others, you actually do not own the money that is in your bank account.
What you actually own is just the promise they give to you.
The banks are money making machines.
The fact that they can lend up to 9 times more money then they hold is scary enough to start asking yourself is the money you own in the bank actually safe.
For every $1 they can lend $9.
Cryptocurrency removes this need to trust someone by incentivizing every actor in the network not to debase the currency and not commit fraud.
What is decentralization?
With banks and governments, the supply and creation of money through mints and interest rates are at their sole discretion.
Users of the currency they control are hence, at their mercy.
With cryptocurrency, however, no individual or consortium is able to affect the supply of currency or exert significant influence over it without the approval of the majority.
Even if there is no majority approval, the minority is free to “fork” away and administer its own version of the currency.
Consider this something like using cigarettes in the Weimar Republic if you think your currency is being debased and worthless.
Back in the 1920s in the Weimar Republic (Germany), because of hyperinflation, the German paper money lost its value and people started to use cigarettes as a mean of payment.
What is Immutability?
When we want to check how money has been removed from our bank accounts, we are able to refer to our transaction history with the bank.
However, doing so implies a few things:
a) that we trust the bank does not fabricate false transactions and manipulate our money
b) that we trust the bank delivers outgoing transactions to our intended recipients and
c) that the bank employs sufficient security to ensure that other parties are not able to make these transactions on our behalf.
When the element of trust and centralization is removed from the equation, there is no longer any party to trust to do this.
As a result, records need to be made public and unchangeable.
The cryptographically secure nature of cryptocurrency ensures that.
While it is not impossible to change the transaction ledger, it is extremely difficult and would require you to oppose the entire network of cryptocurrency users.
Milos is an independent trader, with a background in journalism and publishing. Nomadic by nature, he’s lived in four different countries this decade. He’s fascinated by Blockchain technologies’ potential to reshape all aspects of our lives. Milos got into Bitcoin while completing his degree and hasn’t looked back since, writing about anything crypto-related. He is the co-founder of the Cryptoaims and he has a strong passion to educate people about this revolutionary technology.