Money has played a huge role in human history for more than 5,000 years. Even before that historians agree that there was a barter system used. The barter system has moved from exchanging animal skin, weapons, and salt to minting metal coins to imprinting paper banknotes, and today the shift is massive towards electronic payments and virtual currency.
The history of currency is still being inscribed. The ancient forms of transactions have been designated – for example, there is still margin bartering in some markets like B2B and a few consumer services. As long as, people need an exchange medium the money system will certainly evolve.
The great recession of 2008 was responsible for the launch of Bitcoin, a digital currency. It was designed to address centralized money control and trust necessary in dealing with citizens’ cash. BTC was traded for fun but a $25 pizza was delivered for 10,000 bitcoins in 2010.
After this, there was no looking back and today, the one BTC is worth $37,000. The cryptocurrency arena is rich with plenty of cryptos like Ethereum, Litecoin, Dogecoin, and more. You can read crypto finance updates on ZenGo X, an expert group to educate and boost cryptocurrency knowledge.
In the crypto trading world, there is confusion between cryptocurrencies, crypto commodities, and crypto tokens.
- Cryptocurrencies – Examples of cryptocurrencies are Bitcoin, Litecoin, and Ethereum. The value of cryptocurrency is based on the supply and demand in the market. Cryptocurrencies are evolving. This offers long and short-term investors unique opportunities.
- Crypto commodities – Let’s understand crypto commodities with an example. Oil is a commodity that includes drilling and extraction costs. Besides, it is used to influence the global economy. Crypto commodities work similarly. There is a cost associated with mining them, which is used to power the cryptocurrency economy. Computing power, processors, and storage are crypto commodities.
- Crypto tokens – These are units of cryptocurrency like Amecial cents or British pounds in fiat currency. Technically, the crypto token is a code attached to your public wallet address. The wallet is software designed specifically to network with blockchain technology. For example, a wallet for Dogecoin will store a DOGE-USD token.
Cryptocurrency, commodities, and tokens are used interchangeably but are different entities. Understand the difference because it will be helpful in the future.
Cryptocurrencies have been a game-changer
Cryptocurrency has caused a revolution because it delivers quick, fast, and cheap solutions. International payments are costly and take a long processing time. SMBs find retail card payments expensive. The cryptocurrency speed is claimed to be nearly instant. If a fiat currency is converted into cryptocurrency and sent as payment. The receiver instantly converts the cryptocurrency into fiat then the exchange rate volatility is reduced.
Many large businesses have been accepting cryptocurrency as an alternative payment model. Even governments are planning to define cryptocurrency as a commodity or an asset for payments and investments including taxation. With more legitimacy, there will be less fear and doubt in the unregulated crypto industry.