Hey there! I noticed that sometimes developers and investors might not fully understand the true value that web3 brings or which applications are worth building on blockchains. That's why I'm writing a series of articles focusing on the main applications that make sense on the blockchain. This is the first article, and I hope it helps.
Cryptocurrency: The Internet's Money Layer
In a recent post, Vitalik mentioned that "Money: the first and still most important app," and I totally agree.
There are several reasons why money remains the most important application of blockchain. Let's go through them step by step.
1. Lifesaver: Protection Against High Inflation Unlike wealthy countries like the United States, where financial transactions are easy to make and 8% inflation is considered extreme, in Argentina and many other countries around the world, links to global financial systems are more limited and extreme inflation is a reality every day. Cryptocurrency often steps in as a lifeline. - vitalik
People in third-world countries can convert their local fiat currency into stablecoins that retain their value compared to the local currency.
2. Cross-Border Payments
Global payments can be complicated due to these reasons:
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Payments can take days to process.
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Fees and exchange rates can be high.
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Compliance checks take time.
Cryptocurrencies are borderless by nature, unlike traditional currencies that are restricted by geography. They offer benefits such as low transaction fees, privacy, and instant transfers.
3. Ownership Beyond State Control
In some places, like China, owning land isn't straightforward; you basically rent it from the government. However, cryptocurrencies can't be taken by the government, allowing for more financial independence. This quality has the potential to preserve wealth across generations without government interference.
Infrastructure problems to be solved:
While cryptocurrencies offer many advantages, there are still some infrastructure problems that need to be addressed. Some of these problems include:
1. User-Friendly and Secure Crypto Wallets:
We need built-in methods to make acquiring crypto easy, with a user experience that is simple and friendly. Transaction fees (gas fees) should be less than $0.001. To solve worries about traditional wallets failing, we should develop secure and user-friendly Social Recovery Wallets.
2.Secure Stablecoins Independent of Regulators:
Cryptocurrencies are too volatile for everyday payments. That's why we need stablecoins that aren't controlled by government regulators, unlike stablecoins like USDC, USDT, and BUSD. These are successful but controlled by central entities that can block or freeze addresses. (As we know that even the most trustworthy-seeming centralized services may not be trustworthy after all [FTX, 3Arrows]). Our focus should be on creating decentralized stablecoins governed by the blockchain, free from government regulator influence.
3.User-Friendly On and Off-Ramps:
As widespread cryptocurrency adoption will take time, it is crucial to establish user-friendly on and off-ramps that are both secure and dependable.
4. Educating People and Eliminating the Misconception that Crypto is a Scam: Similar to any emerging technology, the crypto sphere has its share of scammers exploiting it for fraudulent activities, as witnessed in cases involving FTX and social media influencers engaged in pump-and-dump schemes. The industry bears the responsibility of providing continuous education to empower users in distinguishing scams, ultimately enhancing the overall credibility and trustworthiness of the cryptocurrency space.
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