For some people, buying, selling and trading in cryptocurrencies may seem hard from the technology perspective. However, for most people, the most important issue about bitcoin and other cryptocurrencies is the issue of trust.
Whenever a new technology emerges, a lot of people tend to stay away from it because they have had so many negative experiences in their lives when it comes to promises and reality. At the same time, those who embrace a growing trend can make fortunes and become experts for years to come. When the Internet started becoming popular in the early 1990s, not a lot of people thought that in a few short decades it will be impossible to imagine the lives of people without it. Not only did the Internet become an integral part of the computer world but through smartphones it became a part of all aspects of people’s lives, from looking up a movie theater and times of movies to tracking daily goals and activities.
The Issue of Trust
Trust always has to work on both sides. The idea behind the cryptocurrencies is that people and not banks should be in charge of their finances. Cryptocurrencies place trust in people. At the same time, people need to trust the networks and believe that the networks will not disappear tomorrow.
In the case of bitcoin and other cryptocurrencies, the chances of disappearance are extremely slim because of blockchain technology and the way it works. At the same time, most people know that there are no certainties in life, especially when it comes to money, finances, and technology. Bitcoin network consists of multiple users and bitcoin nodes that guarantee that the network will keep running at all times.
The Idea of Decentralization
The idea of decentralization guarantees that even if something happens to one user or a group of users, the network will stay functional. With bitcoin, there can be no failure of the central point because the central point doesn’t exist. Every user is an integral part of the network and the ecosystem. For bitcoin to stop to exist, everyone will need to shut down their computers at the same time, which is nearly impossible.
The way cryptocurrency networks work is the same way that Google and other search engines operate. Tens of thousands of people use Google every second of every day, yet the search engine not only works but does so at a blazing speed. The reason for it is that Google runs on many servers in a decentralized manner, which is why bringing the system down would take a tremendous amount of effort.
People often compare bitcoin and other currencies to the Internet in its early days. Bitcoin is similar to the Internet in that it solves a number of problems. The issue with it is that the problems it solves are so fundamental that people accept them as a part of their lives and don’t even think about them often. These problems are centralization and third parties.
The Problems That Cryptocurrencies Solve
Whenever there is centralization, there is a chance that something happens to the central point, be it a server or a person. It also means that there is a potential for a lot of problems. For example, during the financial crisis of 2008, central banks could decide to print more money and devalue their currency. Currency devaluation meant that people were able to buy less with the money they had. Several players were making decisions that benefited them and everybody around way paying for these decisions. This scenario is impossible with bitcoin.
Bitcoin also eliminates the need for third-party intermediaries. When you need to send money to someone or accept a payment, there is no need to go to a bank. You can do it yourself, by communicating directly with the party that you need to exchange the funds with.
Just like the Internet, it will take cryptocurrencies some time before they become a mainstream technology. There are a lot of cryptocurrency projects and platforms operating today, yet it will take time for people to get accustomed to them and start using them in their daily lives. On top of that, bitcoin and other cryptocurrencies will only become popular after people educate themselves about the cryptocurrencies and principles behind them.
On the other hand, more and more people are trusting cryptocurrencies with every passing day. When you use bitcoin, you can send money to anyone, which is why banks and big players such as the Western Union and MoneyGram will fight the idea of cryptocurrencies and keep calling them “fake Internet money.”