What is a cryptocurrency?
A cryptocurrency itself is a computer software represented by virtual tokens which can be assigned a value associated with money and can be freely exchanged.
It is based on a decentralized system where they can be accumulated and the customer has full control of the asset through a virtual wallet of which he is the sole owner and holds the private security keys.
Decentralized financial system
Blockchain is the technology where it is possible to build platforms for the use of encryption and the offering of tokenized products; in this sense, the value of a cryptocurrency will be based on the adoption and utility that can be given to it.
Free economy
In this way, the decentralized financial model represented by the crypto-assets market is created, which is open source and depends on supply and demand. It is capable of supporting a great diversity of virtual assets to operate in a P2P system, without trust, usable at any time and from anywhere in the world with guarantees of security, traceability, adaptability and scalability without depending on any central entity.
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Conventional financial system
The conventional financial system is dominated by fiat money (FIAT) under certain regulations for its use and issuance.
FIAT money
The value of FIAT is related to some consumer product or commodity, for example, in some nations the gross domestic product such as oil is the mainstay of the economy of the countries and the backing of the money.
It is centralized
The conventional financial system remains under the tutelage of national governments and the administration of resources is done under certain bureaucratic parameters specific to each nation which constitutes a centralized system that makes possible the management of money through banking corporations with certain guarantees.
Inflationary model
The conventional economic model is subject to inflation since goods and services are paid for with fiat money. This makes the stock market depend on a production and supply chain where supply and demand directly affect retail prices and therefore purchasing power depends on the liquidity capacity that wages and salaries can offer.
source: https://www.freepik.com/free-vector/funny-cartoon-illustration_9375028.htm
Why is a decentralized financial system needed?
Nowadays, human beings need to have access to an economic model where they can manage their income in a safe and effective way. Technological progress on a global scale makes use of the Internet for practically all types of operations related to daily life.
The decentralized economy is necessary for several reasons, among them:
Auditable and transparent system
The management of virtual assets through blockchain allows the registration of a public ledger where any transaction or negotiation between parties can be carried out in a transparent manner, since it does not admit intermediaries, leaving an auditable record which is incorruptible.
This indicates that Blockchain technology constitutes an administrative tool of great potential that can be used by any instance, person, corporation, including public institutions, to make their financial management improving the current conventional model.
Improves service delivery
A characteristic of decentralization is that both the economic system and the products offered are automated and can be accessed through an online connection, this means that the customer saves time and money in the processing since the entire process is virtual and adaptable to the needs of each person.
Raises the quality of life
In the same way people can take advantage of the Blockchain to solve any kind of problem in everyday life, such as: Access to education, goods and services, work, social networks, finance, health, industry, research, science and technology, etc. Making use of cryptocurrency as the main asset which means a considerable increase in their level of economic growth and consequently a higher quality of life.
source: https://www.freepik.com/premium-vector/wealthy-businessman-banker-vector-illustration_4445782.htm
Allows saving
It has been demonstrated that in the current stage of confinement that is fulfilled worldwide for more than one consecutive year which is caused by the impact of the COVID-19 pandemic, many people have been able to save resources using crypto as an economic asset to avoid devaluation and control their values through virtual wallets in a secure and autonomous way; Since some currencies such as BTC have limited token production this makes them "deflationary", which has favored many who largely dispense with FIAT money for savings, as well as, banking entities.
Work from home
Some people, as is my personal case, have been able to work in decentralized platforms as continuous publishers and earn an average income which serves as a livelihood to support our families especially in terms of food and other basic needs, such as access to medicines. Avoiding exposure in public places and contributing with biosecurity measures to preserve health and reduce the possibility of COVID-19 infection. Likewise, the educational process in schools and universities has been made feasible through virtual classes after the call # quedateencasa.
These are just some of the advantages offered by the decentralized system to today's society which makes clear the need to adjust to blockchain technology and the new economic model based on cryptocurrency as a way out of the new demands of the modern world.
Final thoughts
Blockchain has an IT infrastructure that allows us to effectively carry out joint projects that can be materialized by simply using a PC or smart device while we remain confined to our comfort zone due to the COVID-19 pandemic. For some of us, today it may represent a form of additional income or an emerging economy system, but according to the proper management and future vision that we can give it, it could become a definitive financial solution as our main source of work.
The conventional financial system is managed by a central entity under certain regulations for the use, management and issuance of money, on the other hand, decentralization is a free system where anyone can access the economic model and have absolute control of their assets being able to appreciate from there the marked differences between the decentralized financial system whose economic unit is the Cryptocurrency and the conventional financial system dominated by the FIAT.
@nachomolina