Why Do We Need Crypto?

13 Nov 2023

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.

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It is future of next generation and economy. No one can deny it.
I think it will still take a long time before crypto can replace fiat money
Thanks for the article, very interesting and beautiful!
Yes cross border payments are difficult BUT there are tradfi methods that are much easier than bank transfers. Expensive yes, but they offer chargebacks, whereas crypto doesn't. Sometimes insurance is worth paying extra for. Crypto does help with this though. Stablecoins are popular for a reason. I think tokens and NFTs are the killer features of crypto. Not for RWAs but for digital goods that had little way to express their value. We've not had a way to trade digital goods natively and permissionless before. Everyone always seems to think all digital assets need to resolve to fiat (or a fiat like currency) at some stage. They don't. There are good reasons you may never "cash out" a digital item but still regularly trade it. These markets aren't fully developed yet but they're slowly being built.
We need cryptocurrencies for many reasons, but above all for freedom and to attempt to level the frightening differences between the powerful and the people.
Great Article
for me crypto saving out time and energy with more security and transparency . no ques , no fake notes , no paperwork , no time table to follow.
Traditional Finance, you say?? WHAT THE HELL IS THAT???
Crypto gives us pure ownership with best utility without limits of borders, time and qué. It is with us under our finger tips 24/7 with financial freedom.
Cryptocurrencies are a portrayal of a brand-new decentralization model for money. They also help to combat the monopoly of a currency and free money from control. No government organizations can set the worthiness of the coin or flow, and that crypto enthusiasts think makes cryptocurrencies secure and safe.
thanks @hangthy for your article. We need crypto to eliminate fraud on our assets. We need crypto to end the wars financed by fiat money. We need crypto to remove the banks that make and gamble with our money.
a very short article for such a Big headline ;D even if i agree with your Argument its shall be stated that is only one of many reasons why crypto
As you know, with CBDC's around the corner we need to let crypto prevail, if not... freedom to waste, transact or hold will be in danger.
Think mainstream adoption is a while away but it's all important with regards to proving a use case and making it all happen. Early adopters can, as always, reap the rewards. Great article!
There has never been a freedom of choice when it comes to tool for trading goods. Now that we got crypto, we can actually be free of fiat currency money. That sounds a little bit more of an understatement to be honest. The most important thing is that, we have a choice of where to store our hard earn money - from work, business, freelance or whatever. There are so much to why we need crypto. Or why we need to have an alternative to fiat. Gold has been good, but it is not exactly easy to be moved around.
Crypto is a way to allow everyone in the world an opportunity to be involved in a financial structure. Banks and stock exchanges can only be used by a certain amount of people. Crypto can be used by anyone with a smartphone or computer and VR probably very soon. The world is changing and Crypto is the leading force.