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Finance Technology

Use Cases of Cryptocurrency Today

Welcome to the future, today. While many people are still skeptical about cryptocurrencies, some people are already experiencing and using the future of money.

Traditional paper money

Traditional money such as paper money will one day become obsolete. To pay someone, you will have to physically carry paper money. The more you need to pay, the heavier it gets. Up to a certain limit, it becomes a security risk, as you could get robbed if someone notices you carrying a large amount of paper money.

Other than that, you will have to transfer paper money physically to another person. It is bounded by geographic location and not easily sent to other countries for example.

On top of that, with the recent spread of virus, paper money can be a source of spreading illnesses. Paper money gets exchanged frequently, does not matter if you are buying fish from the wet market or buying jewelries at a mall, it gets passed from one person to another, without ever being cleaned.

Paper money fraud

With the advancement in technology and knowledge, some people have been able to create high grade counterfeit money and have been circulated in the system.

Digital money and credit cards

In most countries, people are relying more on digital cash or credit cards than physical money. This is due to the convenience of paying someone without having to physically carry a heavy load of paper money.

However, with these digital forms of money, they are also limitations. You can spend in most places locally easily, but there are certain restrictions that you have to follow.

Take for example, if you wish to pay for someone in another country, your bank may restrict access and reject your transaction. Take also into consideration, the unfair foreign exchange and banking fees on top of your transaction. There are many instances whereby your bank refuse to allow payments to certain companies with the disguise that they are protecting you from fraud.

These digital form of paper money has limitations. That they are centrally controlled. It is as if, they decide where you can spend and where you cannot spend your money. It is as if, they are really the owner of your money, and you are not the rightful owner.

Come cryptocurrencies today

As more and more people become aware of the limitations of existing money system and the fraudulent system of the whole monetary supply, more people turn to cryptocurrencies.

With cryptocurrencies, and the correct knowledge to protect one’s own funds, it definitely make more financial sense to embrace cryptocurrency and abandon traditional paper money and restrictive digital cash.

Transferring money without borders

With cryptocurrencies today, you can send money to anyone anywhere in the world. With the use of a smartphone and scanning a QR code, money can be transferred from China to Japan or anywhere in the world without requesting for permission from a central authority.

The disadvantages of transferring money digitally from the traditional system is that, money sent is not instantaneous. You will have to wait for a few days and even weeks for a transfer. In addition, you have to pay hefty fees for the transfer. Also, payments can be rejected and you have to provide lengthy proof of source of fund, show your identity card or passport and expose yourself to data privacy risks. And still, get your transfer rejected! And you have to explain what the transfer of fund is used for. Such capital controls imposed is to fight money laundering they said.

With cryptocurrencies, you can transfer money to anyone without having to provide all the personal information and risk having your privacy exposed.

Your money is under your control

Properly kept cryptocurrencies in a hardware wallet is one of the most secure way to keep your funds. It is the Swiss bank account managed only by you. With such powerful control, you also need to equip yourself with knowledge on keeping your cryptocurrencies and hardware wallet safe such as not exposing your recovery seed.

Transferring money via an image (QR code)

People have been able to transfer money just by scanning a QR code posted on the internet. With the QR code of the cryptocurrency wallet address such as Bitcoin, transfers are made instantaneously.

Just point your smartphone camera to the QR code anywhere, shared from a TV, in your WhatsApp group or YouTube videos, money will be transferred easily. No need to worry about what country the other person is living, what bank he is using or what restriction there are such as ineligibility for opening a bank account (for example, declared bankrupt etc).

People have been using QR code to request for donations in cryptocurrencies. Money sent once confirmed in the blockchain cannot be frozen like bank accounts can.

Sending money overseas for tuition fees or working abroad

Many people are currently using cryptocurrencies to transfer money to their children studying overseas for tuition fees. Or even working abroad and having to send money back to their family in their home country.

Traditional banking systems to transfer funds overseas such as Western Union is currently facing a threat from cryptocurrencies to become obsolete. With their high fees and inconvenience, no wonder people use cryptocurrencies today.

Sending money in the dark web

Although some of the use cases are for illegal purposes such as buying drugs or buying hacked accounts online, it is also one of the use cases of cryptocurrencies today.

Due to the nature of cryptocurrencies, with no central authority to restrict who you can or cannot transact with, cryptocurrencies are used everywhere.

Likewise, it is also true that physical cash is also being used to purchase drugs. It is only a form of medium of exchange. For example, people in prisons exchanging goods using cigarettes as a medium of exchange.

Avoiding bank runs

With the current instability in the financial system, people store their wealth in cryptocurrencies so that they know that they money they own is theirs. With traditional money, money kept in the bank is susceptible to lots of limitations. For example, in the event of a bank run, you will not be able to withdraw your own hard earned money! It is your money anyway, why can’t you withdraw them whenever you want?

As countries get more unstable monetarily and politically, there will be a lot of limitations to what you can do to your own money stored in a bank account. For example, limitations such as you can only withdraw a certain amount of money per day from the ATM, makes you feel like the money in your bank account is not really yours. It is like you do not have total control over your own money.

Paper money is phasing out

As more and more countries promote the use of digital cash, paper money is becoming obsolete. Countries want to be able to track their citizens purchases. Who buy what. Who transact with what, and how much.

Moreover with inflation, countries cannot cope with the rate of printing more money into the circulation. With the stroke of a keystroke, money is created digitally in the computer. So it comes naturally that the use of paper money will be extinct in the near future.

Just like newspapers, home phones and fax machines, as people find easier and better ways to improve their life, they will abandon old forms of technologies.

Micro transactions and games

Yes, people are now able to pay $0.00001 via cryptocurrencies, which is not a possibility in traditional financial systems. For example, pay to view or read a blog post via bitcoin lightning transaction.

Online casinos are using cryptocurrencies for gambling. People can deposit and withdraw via cryptocurrencies easily without having to transfer money via a bank, which will take days and have their transfer rejected.

Other than casinos, some game developers have come out with a brilliant way to allow purchase of in-game accessories via cryptocurrencies. For example, if you want to level-up your game character without spending a lot of time training the character, you can pay via cryptocurrency.

Yes, these are already happening today, not in the future.

Future of cryptocurrency

It is hard to predict the future. As integration of technologies happen, things that we never imagine today will become a norm in the future. Take for example, self driving cars which we have never even imagined back in the days we ride horses and have no cars.

Imagine in the future, as we have 5G in the present and 6G in the future, we can already stream everything with a smartphone. The future is limitless. Also with the advancement of artificial intelligence, everything integrated, the future is definitely interesting.

Categories
Finance

Long Term Investing vs Short Term Investing

Managing your investment money can be stressful. If you have experience in investing, you will understand the ups and downs in a market.

Euphoria & Depression

Whenever an asset increase in price, you will have the feeling of euphoria and want to get a piece of the action. Fear of missing out kicks in. Everybody starts to get enthusiastic all of a sudden. The market is great, everyone is happy.

Whenever an asset decreases in price, you will feel like it is the end of the world. Feel like everything is crumbling down, like the world is coming to an end. Everyone you do is wrong. You have wasted a lot of time, energy and money.

Market emotions

If you are in it for the long haul, short term market fluctuations should not be a big of an issue to you. Always think about the fundamentals, the long term. Price can be irrational, it can go down beyond your expectation when panic selling occurs. However, always keep in mind to remember about the long term fundamentals. What you believed in an asset, and continue to believe. What has changed? If nothing has changed and fundamentals improve but stock price decrease, maybe it is time to buy some more at discounted prices.

Short Term Pain

Investing can be extremely stressful. One moment you feel like you are earning, the next you feel miserable having your portfolio down 25% in a matter of days. Always keep your emotions in check. You are not worth according to how much your portfolio is worth. Relax and take a break.

Sometimes short term loses can cause you to doubt your long term goals. What if the price does not rebound? What if it all goes down to zero? Always stay focus and never doubt on yourself. You have already done all the research, the hard work. Things may take some time to recover. Give yourself some time.

Short Term VS Long Term

Ask traders all over and you will learn that most short term traders lose more in the long term. Long term investors plan ahead and stick to their plans. Strategies such as dollar cost average and buy low sell high may seem easy to learn, but it is extremely difficult to have the discipline to practice. It takes a lot of will to keep buying in a falling asset.

It is not easy to buy when the price increases or buy more when the price falls. Whenever an asset rise in value, you buy a little less piece with the same dollar amount. When an asset decrease in value, you get to buy more piece of the asset with the equivalent dollar amount.

It may seem easy, but trust me, when emotions kick in, it is more difficult than you think. The mind can play all kinds of trick on you. You will think, what if after I buy, the price falls dramatically. Or what if I do not buy, and the price rises to the moon?

What if I sell and the price rises exponentially? What ifs. It can hurt a person emotionally in the short term. Therefore investing in long term with a set fixed of rules is a better strategy. Always be disciplined to buy with a fixed dollar irrespective of the price of the asset.

If the price increases when you buy, great. If the price falls, okay, think long term in the future. It does not matter whether you purchase at $1.00 or 1.20 and the price falls to $0.50 but shoots back up to $100 in 10 years time. Just an example. Market can be irrational more than you can stay rational.

So invest long term. Give yourself a break, and stop stock checking the price every 5 minutes or so. It does not really matter in the longer future. Take a break, take a stroll in the park, go for a swim or whatever. Just do not check the price every waking hour of your life. You still have a life to live. Enjoy.