Money is defined as an accepted medium of exchange for goods or services rendered. Money by itself has no actual value; it can be an item such as a shell, metal coin, piece of paper, or strings of computer code. Its value is symbolic and conveys the importance that people placed on it. Money derives its value from its functions, and it has four primary ones today: a store of value, a means of payment, an exchange of value, and a measure of value.
Money has played a crucial role in the development of our society. It allows people to trade goods and services indirectly; offers people a way to store their wealth in the long term, and communicates the price of goods or services in absolute terms.
What gives money ‘value’ is the fact that everyone knows it is an acceptable form of payment. Throughout history, both the usage and forms of money have evolved. On the other hand, wealth can be defined as an abundance of money. These can be assets, property, or resources held by someone.
Birth Of Cryptocurrencies Has Changed How Money Is Perceived
The coming of cryptocurrencies 12 years ago has redefined how money is perceived and controlled. In the past, governments were solely in charge of printing and controlling the supply of money within their economies, and they have enacted policies that have influenced where this money goes, leading to the development and empowerment of some sections of the population. In nations where governments have made polarizing decisions, anyone who dares to challenge them can even have their accounts frozen. This renders the society powerless since money is the one thing you need to survive within our modern economy.
Over the years, some governments have introduced unpopular policies to boost slow economies, or even went into debt financing wars. Consequently, this has led to inflation of their currencies due to the overprinting of money. This has seen people go broke as their savings lose value due to their actions of their governments. The 2008 financial meltdown that was brought about by the greed of banks saw many people lose their homes and sources of income. This created a spark that led to the birth of Bitcoin, a decentralised peer-to-peer currency that did not require intermediaries to conduct transactions. Also, it gave people complete control over their money, meaning they did not have to rely on banks and governments. It is this economic empowerment that makes crypto so appealing.
Not only is Bitcoin decentralised, but its supply is also capped at 21 million coins, which makes it deflationary in nature. It is why the price of the coin has grown over the years as more people have embraced it wholeheartedly. One BTC today costs about $37,000. Just ten years ago, you would have accessed the same token for a few cents. Compare that to fiat currency designed to lose value with time to discourage people from hoarding money. In a country such as Germany, many pensioners are worried due to the low interest rates offered by banks that are taking the money people save and lending it to suffering economies such as Greece at low interest rates. This means saving money for annual interests is not ideal anymore since your money loses value over time.
Bitcoin The Digital Gold
Gold has been used as a hedge against inflation and to store value over the years. Like Bitcoin, its supply is limited, which is great for its value. The price of a kilo of gold is double that of one Bitcoin even though the market cap of BTC is only a fraction that of gold.
At a time when everything is going digital, people are slowly accepting that digital currencies are the next phase of money. They are fast to transact with, cheap, easy to store and carry around. Also, these currencies are secure due to the use of cryptography, decentralisation, and consensus mechanism. Crypto products such as DeFi allow everyone to participate and get empowered without bias by decentralizing every aspect of the traditional financial industry.
As a store of value, digital assets such as Bitcoin outdo any other asset class by miles. Since 2011, the cumulative gains of Bitcoin have exceeded 20,000,000%, managing to outpace the cumulative gains of the Nasdaq 100 and US Large Caps that recorded returns of 541% and 282%, respectively.
Today the world is witnessing the greatest wealth distribution in the history of humanity thanks to cryptocurrencies. The crypto market is expected to see accelerated growth as more people realise the opportunities these digital assets offer.
Disclaimer: The content in this report is from the open source and for educational purposes only, therefore should not be considered as financial advice. We all know that the cryptocurrency market is highly volatile. Therefore, all the financial decisions should be made after doing your wide spectrum research.