Why Do We Need Crypto?
According to its volatility and unregulated characteristic, crypto is difficult to be accepted by regulatory authority. So you can see that though crypto industry has been developed for over 15 years, its impact is still limited. A survey from Statista says the number of identity-verified cryptoasset users reaches 425 millions by the end of Dec 2022. This only accounts for one-twenty of the global population. In addition, when compared to Gold, Bitcoin's market capitalization is still smaller, only accounting for one-eight. Therefore, why do we need crypto? Is it necessary to use crypto technology to change or break out traditional financial world? The questions all above are what you may ask. In this article, let's discuss these topics together.
The origin of crypto
As one says, finance is the final destination of all industries. Therefore, whether the economic situation is good and wether the economic operations of a society or a country are smooth will be judged based on the development of the financial industry. However, traditional finance has its limitations and develops slowly, which gives an opportunity for the development of crypto. When Bitcoin was created by Satoshi Nakamoto, it was the exactly one year after the Subprime Mortgage Crisis. People found that their money had lost value due to the high increasing inflation. Then they were surprised by the performance of crypto and they turned their views on crypto, to be precise, which was Bitcoin.
In the meanwhile, an European country named Cyprus had a government debt crisis broke out, residents bought in large quantities Bitcoin to avoid risks, that was the first time Bitcoin entered the international stage. From then on, finance has developed into two different ways, one is traditional finance way, other is crypto, or we call it decentralized finance way.
The difference between crypto and traditional finance
To some extent, crypto is the result of the in-depth development of traditional finance and the internet. At the stage of deep development of the internet, people have higher and higher requirements for the security and control of data, and the authenticity of data is often mentioned after some internet giants falsified data issues. However, this issures can be solved easily by blockchain technology. In this way, instead of discussing the difference between crypto and traditional finance, why we don't say we are discussing the extended form of the traditional finance. Traditional finance can not be replaced, and crypto is also not a seperate form, it's the combination of high development between internet and traditional finance. What's not strange that you can see the shadow of traditional financial products in the crypto world.
We use USD in real world, we can use USDT in crypto.
We use bank account in real world, we can use wallet account in crypto.
We use gold in real world, we can use Bitcoin in crypto.
We can transfer money in bank, we can swap coins in crypto.
We can borrow money from bank, we can also borrow coins from Decentralized products.
We use broker buying and selling stock, we can also buy and sell coins in crypto exchange.
In conclusion, traditional finance and crypto should complement each other, not be the opposite sides.
Why do we need crypto
As we all know, fiat currency exchange business is very common in international trade transactions. For instance, I am based in South Korea, and I need to transfer some money to my friend Jack, who is based in South Africa. If using the traditional method, I need to apply for a bank, only after the approval of bank manager, the money can be transferred. In this process, I need to submit my personal information, the bank manager needs to verify my qualifications, by doing this, maybe three days or even a week has gone. What I can do is just wait and wait for the bank's notification. The efficiency is very poor.
But if I using crypto technology, the efficiency would be very good. For example, I can send some bitcoin to my friend, and he will recieve in several minutes, then he needs to swap the bitcoin into fiat money, this process can be done in several minutes as well. It means that no matter where my friends based in, using crypto technology in trasferring assets is a good choice due to its high efficiency and convenience, and the entire process no needs KYC, no needs qualifications. That's why we need crypto.
