You may not think about it during your everyday life and you may forget about it for months or even years. Then you start thinking about it – false debits from your bank account, bank card fraud, bank errors. If any of these ever happened to you, it could cost you a lot of money. Ask yourself this question – “Do I really controll my finances?”
State-issued Currency = Unstable Currency
Of course, you don’t. Not unless you are a crypto-anarchist and your personal financial space is limited to cryptocurrencies only.
The security and stability of any national currency is guaranteed by the state. Only the state can emit money, announce redenomination or even bankruptcy. This is the reason why wealthy people prefer to save their money in stable currencies: Japanese Yen, Swiss Franc, British Funt. Why? Because these states are like effective companies that run their businesses (national economies) successfully and consistently.
But this coin has another side: if the state is the only guarantor of the national currency, it means that all your savings may actually turn into useless pieces of paper or numbers on a computer one day. Of course, the probability is different for emerging markets and stable economies, but the fact is – you don’t have any influence over such things.
There are plenty of examples in recent years that illustrate this. Take the current crisis in Venezuela – some people lost everything they ever had because of short-sighted government policy. Or take Zimbabwe in 2007-2009, when the political changes led to a deep economic draw. The state tried to print more money and ended up with 79 bln% monthly hyperinflation.
There are even more cases in Senegal, Gambia, Tunisia and the Philippines, where the leaders just took gold bricks and cash from the central bank, loaded them into a private jet and flew away. Of course, this happened during military revolts, but the people could hardly comfort themselves with that fact. These are the most recent examples, but looking back into the XX century, one can make sure that such things happen not only in ‘third world’ countries, but also in world’s major economies.
Could Crytpocurrencies Be the Solution?
Cryptocurrencies are widely thought to be an alternative to the fiat world. Although the market is still small, its growth rates attract the attention of major international players. Private users are also taking advantage of BTC, ETH and different crypto assets. Cryptocurrencies were created to remove government oversight – and government abuse – from the equation. It is a bold first step, but it hasn’t quite been brought to fruition just yet.
The more we hand over responsibility for our actions and mistakes to other institutions, the more we pay for it. The more we take our own risks, the more money we save, but the more we are responsible for our own actions. And the more we lose in case of an error.
Blockchain technology eliminates the element of trust, so much is clear. Moreover, cryptocurrency exchanges are open 24/7, whereas fiat exchanges have set working hours and sessions. But the human factor goes far beyond this. You have probably heard of dozens of cases when Bitcoins were lost because of misclicks, wrong addresses, or even accidental loss of hard drives or USB sticks. Remember the story James Howell, who accidently threw away an old hard drive with 7500 Bitcoins on it? It would be over $9 million worth now – painful to say the least.
One thing to keep in mind about cryptocurrencies is their volatility. On May, 22, the Bitcoin community celebrates ‘The Bitcoin Pizza Day’. On this exact day in 2010, Laszlo Hanyecz paid a Bitcointalk.org user 10 000 Bitcoin for a pizza. It equaled some $25 then, and is over $12 million now. Sounds like the most expensive pizza ever. But who could know that the price would go up so much in just 7 years?
Security issues present a major drawback for cryptocurency – even decentralized exchanges may be (and have been) hacked. Unfortunately, in the world of cryptocurrency, unlike on traditional exchanges, the service provider does not guarantee you anything. You cannot reverse an action if you make a mistake. You have to trust (again) that the exchange is secure and hope that nothing bad happens.
A recent study determined that roughly one third of all cryptocurrency exchanges have been hacked. The study’s research spanned seven years, beginning in 2009 with the emergence of Bitcoin through the end of 2016. It was in 2016 that one of the biggest thefts on the crypto-market occurred: the users of Bitfinex lost over $70 million in Bitcoin due to an attack. And in 2014, the Tokyo based exchange MtGox lost about $350 million in Bitcoin. Quite a big sum, isn’t it?
Of course, the crypto world is at the forefront of the nextgen economy. But what is the next step?
Capital Market 2.0
The next stage will probably be the Capital Market 2.0, when the traditional financial market meets the crypto world. One might think that this will not happen soon, but here comes a project that has already developed the prerequisite system.
The soon-to-be launched Exscudo Exchange, according to the design of its creators, will comprise features of centralized and decentralized exchanges: it is based on a centralized platform and a decentralized access and data storage mechanisms. It also features its blockchain tokens, Eon. This whole system works on smart transactions, making it the second generation of blockchain.
It enables Exscudo to be as stable and secure as its fully decentralized competitors, but at the same time to prevent any scam activity based on misuse of its blockchain. Such policy does not mean that new assets will never be added to the Exchange – however it will need to pass strict audit by the team, to make only safe cryptos available on Exscudo.
One of the main components of the Exscudo ecosystem is an exchange platform based on their proprietary software combined with the blockchain mechanism of access. The exchange is designed to withstand serious server loads with thousands of transactions per second, making it a fit for all kind of customers, from individuals who have some savings in BTC, to corporate clients as big as leading global banks, all of whom will be able to invest in cryptocurrencies legally. With such a large scale, security of transactions is a number one priority in digital finances.
The product architecture, a hybrid of best centralized and decentralized practices, makes seamless connectivity of all Exscudo products possible. Everything from your money and personal information to your chat history and transactions is available only to you. Exscudo will not let any fraudulent activity occur on the trading platform. It’s as simple as that.
[Note: This is a sponsored article provided by Exscudo]
Are you more confident in cryptocurrency or state-issued currency? Can Exscudo resolve some of the issues plaguing crypto? Tell us what you think below!
Images courtesy of Exscudo, Shutterstock
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