Cryptocurrency at it's core is an idea that I'm a strong and vocal supporter of. The fact that you, and you alone control your money is a huge advantage of cryptocurrency when compared to traditional currency. However, cryptocurrency is far from faultless. In my opinion, the perfect cryptocurrency needs to address all of these aspects:
Decentralization
Affordability
Privacy
Stability
Environment
Decentralization
This is the problem addressed by Bitcoin, the original cryptocurrency. Bitcoin was the first digital currency to operate without the need for a central authority. For the first time, you could send a payment using a system that wasn't dependent on a central company, server, or government. Every time you wanted to send money, you could do so without asking permission, and without seeking approval, while still knowing that your payment was going to be securely verified and transferred to it's recipient. Centralization is an extremely uncommon issue when it comes to cryptocurrencies, since decentralization is one of the core ideals behind cryptocurrency in the first place.
Affordability
By affordability, I don't necessarily mean the cost of a particular cryptocurrency. Instead, I mean the cost to make transactions with a particular currency. For example, to make a $5 payment with Bitcoin, you may be required to pay upwards of $10 in transaction fees alone. This is a significant issue if you intend to use cryptocurrency for every day payments, as if it's cash. Imagine if every time you morning, when wanted to send $5 to your local coffee shop, you had to pay $10 in fees. Your $5 daily coffee would suddenly become $15 including transaction fees.
This problem was arguably most notably addressed with BitcoinCash, a fork of Bitcoin with the intent to serve the same role as everyday cash. BitcoinCash makes use of larger block sizes and more scalable infrastructure as a way to reduce transaction fees from a few dollars, to a few fractions of a cent. Instead of being limited only to large transactions, BitcoinCash can be used as an every day currency, just as if it were the US cash you carry in your wallet.
Privacy
Cryptocurrency is inherently more private than proprietary software like PayPal or Google Pay, since cryptocurrencies are almost always open source and their code is freely auditable. However, most cryptocurrencies, including Bitcoin, make use of a completely public ledger. Anyone can see anyone else's transactions on the blockchain. Senders, recipients, times, dates, and amounts are all completely public information. Since cryptocurrency addresses are directly tied to a person's identity, this isn't as big of a deal as it sounds, but its absolutely not ideal. This forces users who want to protect their privacy to generate new wallet addresses frequently.
This problem was addressed with Monero, a cryptocurrency that places an emphasis on privacy. Monero uses advanced cryptography to ensure that transactions and their information are kept private, while still allowing for them to be verified in a decentralized manner. When you make a transaction with Monero, your privacy is protected by default, and you don't have to worry about managing multiple addresses to keep your transactions from being tied back to you.
Stability
Currency at its core is a way to transfer value between people. Instead of having to trade items between people for products and services, currency allows people to transfer value in a much more convenient way. When everyone agrees on the value of a currency, it can be exchanged for goods and services with anyone.
Cryptocurrency is a fair bit different from normal physical currency in that it changes value rapidly. The US dollar has been slowly but consistently losing it's value over the course of history. However, for day to day transactions, it's value is consistent enough that an individual can accept payment, and use it to purchase something of similar value a week later. This is not the case with Bitcoin. If a business accepts a certain amount of Bitcoin for the sale of a product, it's entirely possible that that same amount of Bitcoin will be worth double or half the original amount a week later.
This variability is a big issue for mass adoption. Why would a customer pay with a currency that could be worth twice as much in a week? Contrarily, why would a business accept a currency that could be worthless in a month? However, there are plenty of attempts to remedy this issue, and some have had great success. TetherUSD may have been the first serious attempt, but it fell apart relatively quickly due to it's centralized nature. However, Dai has tried to address this issue while maintaining decentralization. It uses various methods to keep the price of Dai around $1 US dollar without being dependent on a central authority. Dai has been much more successful than TetherUSD, and is a great foundation for so-called "stable coins".
Environment
This is an aspect of digital currency that is often overlooked. When you transfer money in a bank, energy is needed to power the banks themselves, the infrastructure between them, and to fuel various other necessary services. Cryptocurrency is a great opportunity to make this process more efficient, but so far Bitcoin hasn't exactly taken advantage of it. Bitcoin uses 'proof of work', which is a highly energy intensive process. You've probably heard of Bitcoin mining, where millions of people leave their computers processing and verifying transactions. This is great for decentralization, but can lead to a lot of wasted energy.
Cryptocurrencies like Cardano have opted to use a method called 'proof of stake', which maintains decentralization without burning nearly as much electricity. Instead of transactions being verified using energy intensive calculations, proof of stake has 'stakeholders' decide which blocks will be added to the blockchain. Of course, this method still requires electricity, but it's drastically more efficient than a traditional proof of work system.
Cover photo by CardMapr.nl
