Top 5 Financial Problems that Cryptocurrency Solve

Some asks and curiosities naturally nest into the minds of new investors in the Cryptocurrency industry. Certainly, it’s because of the lack of knowledge of the benefits of the cryptocurrency industry, meaning newbies are emptied of the knowledge of Cryptocurrency industry benefits, and it’s quite natural. Some common questions among newbies are: what are the real benefits of Cryptocurrency? What problem does Cryptocurrency solve? Why is Cryptocurrency a better pick than traditional finance? Why should we embrace Cryptocurrency for our own sake? And there are also so many such questions. Indeed, these questions have all valid answers in favor of Cryptocurrency that must transform a Crypto hater into a Crypto partisan. So, if you are truly an enthusiast about knowing the answer- what problems does the Cryptocurrency industry solve where the traditional financial system is baffled? – this ” Top 5 Financial Problems that Cryptocurrency Solve” article is for you then. Let’s jump onto the solution developed by the Cryptocurrency industry.

Top 5 Financial Problems that Cryptocurrency Solve

1. Cryptocurrency solves the inflation problem of Traditional Financial Syatem

US Dollar Inflation Rate : 2010 to 2022

To be honest, by the time we were about to take preparation to research for this article ‘’what problem does Cryptocurrency solve?’’, our eyes got stuck at a most-talked-2021-incident right up. The incident is that the United States confronted its ever-highest inflation rate, 6.2%, in October 2021. If you think cold-mindedly, you can feel how big that percentage is. But; unfortunately, that inflation percentage grew to 7.2% by February 2022, which is the highest rate since after 1982. The United States isn’t the sole sufferer of the inflation problem rather other countries including Brazil, Turkey, New Zealand, Spain are also aggrieved.

So, who are the actual victims of the inflation problem? Government or general people like us?

• The answer is- general-people like us. Look, if you had been holding 2.28 Million USD since 1987 to date, do you know by how much percentage it would have tumbled down by now?
• Indeed, that 2.28 Million USD would have tumbled down to 1 Million USD by now, leaving you a decrease of 43.86% in the last 33 years.
• Wait a minute. Didn’t you store that 2.28 Million in USD for saving? Did it bring you any profit? It’s obviously NO. This huge loss you faced is just due to the purchasing-power-loss of that 43.86%.

Now, come to the relevancy of Gold as a store of value. Whereas per ounce gold price was at $2400 in 1980, it is now at $1800 in 2022. So, if you had held Gold, you would have to calculate a 25% loss.

Now, come to the discussion, why does inflation actually happen?

• Indeed, governments and central banks augment the interest rate and circulating supply of fiat currencies as much as they want.

Think of one thing, both gold and fiat currencies have no fixed amount of supply. And that’s why supply is the weapon for the inflation of these assets.

Now the question is-

How does Cryptocurrency Solve this Inflation Problem?

Look, the thing that alienates Cryptocurrency, especially Bitcoin, from fiat currency is fixed supply. As said earlier, no fiat currency around the globe has a fixed supply. Governments always print currency with the help of central banks. On the other hand, Bitcoin has a total supply of 21M BTC. So, whatever happens, Bitcoin cannot cross that periphery by not a single penny. And you know gold also has no fixed supply.

So, this fixed-supply feature segregates Cryptocurrencies from the issue of inflation, which is still a major hurdle for fiats.

However, it’s all about supply, but a question still remains- why there are demands for Cryptocurrencies? Would this fixed-supply feature be enough for cryptocurrencies even when they are in a gradually-decreasing mood?

• The answer is NO. Nevertheless, let’s judge the fact neutrally whether the demand for cryptocurrencies is increasing or decreasing day by day. What will be the future use case scenario of Cryptocrrencies?
• Firstly, we have to check the statistics of the last 8 to 10 years to check whether the number of cryptocurrency users has increased or not.
• And then, we will discuss rationally whether the number of cryptocurrency users will increase or decrease after a few years down the road.

So, let’s have a glimpse over the sapless data. In South Asia, there is common hearsay, which is- you can determine if your rice is cokked by testing one grain. If it’s medium-hard, it needs a few more minutes to be fully cooked.’’ In the case of testing cryptocurrency data, the same strategy is used.

You may have heard the name of Coinbase, a centralized cryptocurrency exchange if you have been with the Cryptocurrency industry. Locating in the USA, Coinbase stands as one of the renowned cryptocurrency exchanges.

Coinbase had a total of 30 thousand cryptocurrency users in 2013, and the number accrued to 1.7 million in 2014. And, that number of users continued to increase in the following years like 2.3 Million in 2015, 4.7 Million in 2016, 13.3 Million in 2017, and 25 Million in 2018.  

So, you see that the number of cryptocurrency users is increasing every year and this succession of growth has been running since 2019. For example, in 2019, the number of average cryptocurrency users in Coinbase was 32 Million, and the number became 39 Million in 2020, and thus continued later on like 43 Million also in 2020, and over 58 Million in 2021. So, there has been a steep increase we are seeing in the cryptocurrency developing graph.

Let’s come to the second point, which is the realistic discussion over whether worldwide cryptocurrency users may decrease over time or increase.

• NO, the reason is we are gradually falling back on a technology-based world, which is affluent with DeFi, Web3.0, Metaverse, and Play to earn type games. And, if you attempt to find out the root of all these things, you will find the name of cryptocurrency. That’s why we believe that the demand for cryptocurrencies will increase several folds in the next 10-12 years.

So, at one point, cryptocurrency is the harbinger of all new technology-based innovations, in another point, it is solving the inflation problem of the traditional world with its fixed supply feature. So, the cardinal wave of cryptocurrency is yet to come. We are still in the early phase like the early 90’s internet industry. Indeed, the inflation problem in the traditional financial system is so terrible that we are overwhelmed by how Cryptocurrency smartly deals with the issue. That’s why we kept “The Inflation Issue” at the first position of the top-5 points of problems identification.

2. Cryptocurrency dispels the limitations of money-making opportunity

Look, if you delve into the world-map carefully, it will be obvious to you that due to the combo of the current financial system and societal state, the rich are becoming rich around the world and the reverse is happening with the mediocre people.

At the end of the month, general people remain emptied of money due to price-hike, inflation, vat, tax, and other related issues. And even if they have something remaining in their hands, that amount can barely change their fates. It’s the bitter truth. Let’s come clean with an example.

• Suppose- you are a 35-year-newbie and earn 2500 USD in total monthly. And your monthly expenditure is 2300 USD, leaving you a 200 USD surplus. So, you can invest that amount in a potential project if you want.
• The bitter reality is that our existing financial system is nothing but a blood-sucker. Only this 200 USD will bring no impact on your life, and you know that. But, you should try to find another source of earning within your routine job with that little amount. However, you don’t have the enthusiasm indeed because you don’t have such a scope around.
• Hold on! Do you know that cryptocurrency has come with the solution to the problem of our traditional financial system? How?
• Look, if you move wisely in the cryptocurrency industry, you will find ways of earning a handsome amount of return with only a pocketful of money. But, we are making you remember one thing- never try to get rich overnight in the cryptocurrency industry. The reason is that greed is such a quality that never lets you remain seated idle in the cryptocurrency bear market. It’s a common sight in this market is that the movement of other projects makes one puzzled about one’s existing project because it is not moving as much as others. So being dejected, that one person sells off his project in a rush and afterward sees the project starts moving massively.

So, how does the cryptocurrency industry widen the narrow-earning-source of the traditional financial system?

• Let’s cut to chase. What we said in the previous part is suppose you have 200 USD residues at the end of the month. But, you don’t have an option to invest that amount in.
• However, what would happen with you if you invested in Bitcoin in 2015?
• In 2015, the price of Bitcoin was slightly above 200 USD. So, if you had purchased 200-USD-equivalent Bitcoin at that time, you would have gotten 90 cent Bitcoin easily by now. Bitcoin was on slow movement in 2015, but if you continued holding it with a strong motive, it would give you 50,000 USD by 2021.  
• Exactly, it’s the value of that 200 USD. Are there any other ways except cryptocurrency in the traditional financial system that offers you such freedom?

Obviously, there isn’t. Many people even think that Bitcoin will never offer such an amount of profit as what it offered in 2017 and 2021. And if you also think so, the following paragraph is specifically for you then.

• Look, the world is gradually entering into a new technology-based world through metaverse, Web 3.0, NFT, and so on. A proverb goes, ‘’given the one, the other will follow.’’ So, if you pull the ear, what the head will come out is cryptocurrency. Cryptocurrency is not a bubble rather it’s a reality.
• You have to agree that there is no point in denying the fact that how Amazon, Facebook advanced and modernized their 90’s technology. But, this is not the end of that technology war. However, if the existing tech giants fail to advance their technology coping with the era, they will also disappear like Nokia in the interval of time.

So, what’s the strength of Cryptocurrency?

• What we have suggested to you earlier is that you can invest your savings in a potential project as a long-term investment.
• On the other hand, Defi is an exceptional innovation for passive earning in the cryptocurrency industry. Verily now, there are several ways available for passive income in this space. We have recently written an article on how to make passive income from the cryptocurrency industry, so if you are eager to know about it, you can read that article.
• Look, the cryptocurrency industry is still in the growing phase and so there are huge opportunities for earning money from this industry.
• In the initial time, even earning a 10% yearly return was barely possible by stable coin staking in the cryptocurrency industry. But now, you can enjoy a 30%+ return by staking. Indeed, Platypus Finance is offering that massive return on stable coin staking.
• There are so many such innovative type cryptocurrency projects that provide you a handsome amount of return on staking. Indeed, Defi is the future of the Cryptocurrency industry. We believe that the amount of TVL in the cryptocurrency industry will touch hundreds of trillion dollars.

So, still, we are in the early phase, and a large amount of investment is needed to earn a handsome amount of money in the traditional financial system. But, investing in a potential project is needed for earning huge from the cryptocurrency industry.

3. Cryptocurrency is cheaper, faster, and securer than traditional finance

Let’s tell you a statistic– Indian customers paid 263 billion rupees of foreign exchange fees in 2020. But the interesting fact is that if this fee had been paid in cryptocurrency, those Indian customers would have saved 90% costs. Compared to the traditional finance system, the cost of cryptocurrency is too narrow.

There are also several reasons behind this and these causes are:

• In our traditional finance system, much manpower is needed, and every financial action is done manually. That’s why the management system of the traditional financial system is costly.
• So, it’s quite natural that those who run this current financial system won’t bear this cost with their own money rather they will derive this cost from customers. That’s why the foreign exchange fees in traditional finance are high by nature.
• For example- if you want to transfer money from the USA to Japan, you have to pay at least 1% of the transaction fee. This is not the end of all problems because confronting problems is essential when you need to transfer a big amount.
• Moreover, there are security issues too with long-standing payments in our traditional financial system. With the proper technology, the Cryptocurrency industry solves these issues properly. The details of this part will be discussed in the cross-border transaction section.

You are at risk providing that you have a lot of native currency in your hand. The reason is that any leakage of this information can lead to a massive collapse. Contrarily, you don’t have any security-related issues even if you have millions of cryptocurrencies. No one around you knows how much amount of cryptocurrencies you are carrying in your hardware wallet. However, such freedom is beyond imagination with your traditional currency.

4. Cryptocurrency solves a massive problem of Cross-border transactions where Traditional Finance is failed

Look, saying truly that if you ask us to point out a specific sector where the Cryptocurrency industry is more advanced than the traditional industry.

• Without any delay, we will answer ‘’cross-border transactions.’’

Actually, a solution to a big problem is worthy of a high reward. The Cryptocurrency industry solves the issues of cross-border transactions so smoothly that it was unimaginable even 10-12 years ago.

In the traditional method, cross-border transaction is expensive, lengthy, and troublesome. But, in the cryptocurrency industry, it is easy, fast, and cheap.  

A statistic shows that the amount of global remittance and cross-border payments transactions can grow to $40 trillion by 2026. And, this statistic can make you think how massive the market is.

Nevertheless, we have to say that the market is still so immature and not user-friendly. Why are we saying so?

• One of my acquaintances serves a small job in New York City. Indeed, he has been serving in a local glossary shop for the last 10 years. But, his family resides in any of the South Asian countries. At the beginning of 2020, his family fell into big trouble when the entire world was undergoing a critical time. By that time, the person was at a loss because he had money in his hand but had no option available for sending money to his family.

Just think that time like 2020-22 again returned but still, you don’t have any alternative for the cross-border transaction. You need to count 2-3 days for a cross-border transaction. Is such a way reliable?

• Definitely, not. So far cross-border transaction in the traditional system has been adoptable as we had no alternative available. But, the scenario is changed now because you can send bitcoin instantly to any place in the world at any time. For so, you are not accountable to anyone. And you already know that Bitcoin has no off-day, so the transaction is open 24/7.

Hence, the cryptocurrency industry can take down the whole traditional industry only with its instant transaction facility. So, let’s come to know in detail what massive issues the cryptocurrency industry solves in cross-border transactions. So the question is-

What problem does Cryptocurrency solves in cross-border transaction?

• Cryptocurrency creates no issue while sending big amount of money.
• No fear of data leakage owing to the absence of 3^rd party.
• No accountability issue.
• Cross-border transaction with cryptocurrency is less time-consuming.

No alternative to Cryptocurrency for sending big amount of money

You can send a limited amount of money through the traditional banking system, facing so many formalities and complexities. And, the traditional banking system will make you face even more troubles providing that you make cross-border transactions for business-purpose.

• But, with cryptocurrency, you can make a cross-border transaction within a moment in a decentralized way from one wallet to another. No one will interfere here.
• Moreover, you have to count a big amount of fee for cross-border transactions in the traditional banking system, whereas the fee is very little with cryptocurrency.
• Through the banking system, you cannot send money to any country you want, but you have this advantage with cryptocurrency. The reason is cryptocurrency allows you to send a big amount of money to almost all countries.  

No fear of data leakage owing to the absence of third party

Indeed, the bank plays the role of an intermediary between you and the person to whom you are sending money. So, here the bank acts as a third party to assist you. However, there exists a possibility of your data leakage here, and no such fear is present when you are making cross-border transactions with cryptocurrency. 

No accountability issue

Look, you have to undergo an interrogation process while making cross-border transactions through a bank, depending on the country and transaction amount. Sometimes, this interrogation becomes so intense that makes you feel like a victim. Indeed, this is highly irritating. But, with cryptocurrency, you have the freedom of sending money regardless of how big the amount you are sending and where you are sending it. There lies no accountability issue and personal info sharing in the cryptocurrency space.

Cross-border transaction with cryptocurrency is less time-consuming

Unfortunately, Russia and Ukraine are at war now. And this war has shown the limitations of the traditional financial system and also the capability of cryptocurrency. Like, so far, after being attacked by Russia, Ukraine has sent a total of $20 million cryptocurrencies as a donation to the country’s soldiers.

So, what’s the sole medium for sending money instantly to Ukrainian soldiers from any corner of the world?

• Certainly, it is cryptocurrency. Maximum ATM booths in Ukraine are now under shut-down, and who knows what is going to happen in the future. Even though banks are also closed in that country, the digital way of cryptocurrency is still open and will remain open.
• Now think, your family stays in Ukraine and you need to send them money. So, logically, you have only one option to send your money through, which is cryptocurrency.
• Thus, cryptocurrency makes its way to go-ahead from the point where traditional finance stops. That is how cryptocurrency solves the limitations of our traditional finance.

5. Cryptocurrency brings unbanked people into the rope of the digital financial system

A report of CNBC, which was published in the late-2019, showed that 25% of USA people were still unbanked. It sounds startling to hear that 25% of people are still unbanked even in this digital era. So, how to send money to that 25% of people?

• So, if you read the above writing attentively, you can understand that cryptocurrency is the only way to use for sending them money.
• There is a class of people who think the banking system is full of complexity, and that’s why they avoid coming under this banking system. Upon willing, they can use the currency of the modern age by connecting Metamask wallet.

Conclusion

Indeed, we intended to demonstrate the real scenario by drawing the difference between the traditional financial system and Cryptocurrency. While exploring over ‘’what problem does cryptocurrency solve?’’ article, what we found is the Top 5 problems where the go of financial system stops, cryptocurrency starts moving on. The existing traditional financial system is costly, slow, and discriminative. On the others hand, Cryptocurrency works in favor of common people by solving all financial problems. So, it goes without saying that the popularity of Cryptocurrency is increasing day by day. However, what’s your opinion on the future of Cryptocurrency?