Every day we entrust our finances to banks, we keep money on our accounts believing that they are safe there. Who doesn’t have a bank account, or a few these days? We don't even look for alternatives to this financial system. After all, we wouldn’t want to keep the cash under the mattress or in our socks. Especially that non-cash payments are the most common now - we get our salary via bank transfer, a friend gives us back the money that they borrowed to our bank account, in shops and restaurants we choose to pay by card. Non-cash trading is also more and more often recommended by the governments of various countries as a safer and more profitable way of currency trading. Polish government established Non-cash Payment Support Program, which supports businesses in payment terminal installation, reducing the costs of its use.
These days, we see our money mainly in the form of numbers changing on the screen of our laptops or smartphones. And yet when we hear about cryptocurrencies and the blockchain system, we take it with a grain of salt and keep sceptical. First of all, as a humans, we don't like what we don't understand and what is new for us. Therefore the first thing to do it built trust is to get to know how it all works. If we think about money as a specific conventional exchange system, it turns out that dollars or euros are kind of an illusion too. This approach requires going beyond the scheme and abstract thinking.
An American journalist Maria Bustillos in her article shows the paradox of money. She says that the essence of understanding and trusting cryptocurrencies is understanding that money is not real. Your money does not exist anyway, regardless of whether you talk about the number of euros on your account or the number of bitcoins you own.
It is the era of digital money and bitcoin is at the top
If money doesn’t exist what do we keep on our account then? An social agreement, that’s for sure. We agree that for some amount of money we can buy some product or pay for a given service. Bitcoin establishes a social consensus in which data is processed without the participation of any third parties. The idea arose in response to the financial crisis between 2007-2009 when banks began to give people risky loans. However, they didn’t expect any significant failure of such loans, which they had to face in the end. Banks lost the money that the customers had entrusted them to keep safe. Many of them have collapsed and filed for bankruptcy, and that resulted in people losing confidence in banking.
Then the idea of bitcoin was reborn, after being abandoned in the 90s.
The key idea of bitcoin is that the participants control the system, not banks or any another financial institution. The risk of corruption is eliminated, and the harmful effects of centralization of finance are not a threat anymore. What we gain is an increase in the payment system efficiency, especially that there are no additional fees or other costs. For Bitcoin, all you need is a smartphone, and that makes is a good solution for the third-world countries where very few citizens have a personal bank account. When the government made the wrong decision on the local currency in Zimbabwe, hyperinflation occurred. Bitcoin is their new crisis currency now.
A more thorough overview on the idea of bitcoin is presented in a fascinating way in a documentary Banking on Bitcoin, available on Netflix. I highly recommend to check it out!
FinTech makes life easier...
In addition to the growing blockchain-based systems, mobile financial solutions are also progressing significantly. Apple created a solution for their customers enabling them to pay with their iPhones, iPads or Apple Watches. Apple Pay is faster and there is no need to carry a wallet with you. Apple’s CEO Tim Cook described the magnetic cards used for payments as inefficient, old-fashioned and not secure enough. The solution is now available in 29 countries and is getting more and more popular.
...and helps us manage our budget
Recently, there have been some interesting solutions to help you save money and gain trust in cryptocurrencies. The Revolut app allows to buy and exchange the most popular cryptocurrencies, make no-fee international transactions and activate a money saver with every purchase. What’s more, you can additionally get travel insurance when going abroad or doing extreme sports. You can also extend coverage for an accompanying person or protection for your smartphone. Revolut is an excellent mobile banking solution with cool extra features. It is the perfect example of an app that quickly solves the most common problems of modern people.
Speaking of modern people’s needs
I’m sure that in times when people knew only barter exchange (e.g., a fish for a kilogram of tomatoes), the introduction of money could have caused similar controversy as the emergence of cryptocurrencies. Let us remember that society gives meaning to the means of exchange; all these ways are a social contract. And in the modern world, technology sets the direction to it. Many kinds of research indicate that it is worth to trust technology because it significantly increases the quality of our lives. Besides, if we have already agreed that the current money system is an illusion, what do we have to lose anyway?