Picture this scenario: It’s a few years down the road and cash has been eradicated from society in favor of central bank digital currencies (CBDCs) and while the underlying structure of CBDCs would be based off cryptocurrencies, they would be completely controlled by governments and managed by the banks. With all commerce becoming digitized, this would present the potential to have every single transaction tracked and traced.
It might not sound too bad at first, but what would happen if you accidentally purchased a good from a local merchant whose account had been blacklisted. Through your association with this account, it could create a negative effect where the bank deems you as a threat and proceeds to freeze your CBDC assets. If you had no other assets with immediate liquidity, then you would enter into a huge crisis until the issue was fixed.
Although this might seem far-fetched, governments around the world are already working on developing CBDCs while simultaneously trying their best to implement regulations in the crypto space. The truth of the matter here is that governments and banks are terribly frightened of cryptocurrencies because of the technology it’s built on and what it offers to people. In essence, blockchain technology is doing to these entities what the car did to the horse and carriage.
When defining what a blockchain is, it’s helpful to imagine it as a chain that’s made of pieces of blocks, which represent packages of transactions and are verified by nodes within the network. Meanwhile, the chain is the ledger that keeps track of all the previous blocks. In any given network the nodes are distributed, meaning that anyone who meets a certain set of criteria can participate.
Since there are no hierarchical structures, institutional intermediaries, or even geographic barriers to prevent contribution, blockchains offer the ability to include everyone. This has served to promote a positive atmosphere, which allows equality, transparency, and decentralization to exist. In addition to these newfound values, the use case for blockchains is tremendous as money can be sent around the world in the blink of an eye with negligible costs.
The fact that blockchains are such a revolutionary technology make the owning of its assets extremely important for a variety of reasons. It is no secret that the people with the foresight to invest in Apple or Microsoft before the rise of the internet made millions. With crypto the same could be said and more, as early investors in Bitcoin, Ethereum, and even recently in Solana or Shiba Inu have made astronomical gains.
As the main financial instruments for networks on the blockchain, cryptos have the potential to give more people money than ever before. Although asset appreciation is a huge part of wealth accumulation, having sovereignty or freedom over your finances might be the most important thing about cryptocurrencies. At no other time in our recent history has there been an opportunity like that which crypto provides while the alternatives seem destined for a dreary outcome.
Originally published: https://www.autonio.foundation/posts/learn-with-autonio-the-importance-of-cryptocurrencies
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