Currency control and regulation are as important to the government as the cry of a newly born child. While the government wants to be able to stand, they also want to be able to carry out a certain level of control of the fiat currency legally approved for commodity and monetary exchange.
Unfortunately for the government, there is a global currency, a legal tender means that cannot be controlled by the government. It can be regulated by the central bank of different countries.
How can you have a currency without control or regulation? How can you have a currency without having a monitoring agency? How can you have a standalone currency?
Cyberspace is a world on its own that has almost everything that is needed in the physical world including its currency and its currency is called cryptocurrency.
Cryptocurrency is a thing of concern by most governments, it is a challenge for the government not to be able to control the flow and adoption of cryptocurrency in the global space. Even though countries may truly desire to control it, it may be impossible, or let us say it will be difficult, and the reason is that cyberspace is a dynamic industry. Cyberspace is like flowing water that can navigate its way out of control or regulation.
The cryptocurrency was born out of the need for the government not to be able to have control over personal money. It started as a whitepaper presentation by Satoshi Nakamoto, who also implemented the whitepaper by developing Bitcoin.
It runs strictly on cyberspace, it is a currency that cannot be felt, touched, or seen but it exists, running uncontrolled and unregulated in cyberspace. Cryptocurrency is a digital currency that makes use of a technology called blockchain technology.
Blockchain technology brings solutions to many challenges that the world is facing and the need to access the solutions will require payment using cryptocurrency. So, let’s quickly look at some of the solutions a blockchain technology is a solution and the cryptocurrency associated with each solution
First is the bitcoin network, a decentralized financial transaction model without the need for a middleman generally known as the bank. In the physical world, all funds go to the bank that is directly controlled or supervised by a central financial house. Carrying out any financial transaction will require you to first put the money in the custody of a bank who will now you to carry out the transaction. The bank will determine how much you can send, or when the transaction will be completed, and will then give charge you for using their bank. The bank as the middleman has influence in every financial transaction. Well, that was so until bitcoin came to take away that influence by introducing a peer-to-peer transaction model and instant transaction completion via the bitcoin network. A peer-to-peer transaction model eliminates the need for a middleman and ensures that transactions are completed almost immediately. So, Bitcoin is the currency that operates in the Bitcoin peer-to-peer network. Outside Bitcoin, there is Ethereum. Ethereum is a decentralized smart contract model.
What is a Smart Contract? It is a computer protocol that helps to facilitate, verify, or enforce the negotiation or performance of a contract. A smart contract can function in financial exchange, property rent, voting exercise, share exchange, or purchase of goods & services, etc.
Again, just like Bitcoin, Ethereum eliminates the need for a middleman who will be required to draft your contract. Let us say, for example, you want to prepare a contract that will enforce the payment of goods Let say there was a contract between a buyer and a seller for the purchase of goods on credit with a promise to pay on a specific date and a smart contract was initiated for enforcement where there is a failure to on the buyer’s end. A smart contract can be initiated as an enforcer and let us say the enforcement is to release a change of property ownership document signed by the buyer to the seller which the seller can use to claim the ownership of the property for failure to pay for the purchased goods. So once the smart contract is enforced, the property automatically changes ownership.
In another scenario let say the buyer is prepaying for a product but wants a smart contract that will enforce a refund with interest if the seller fails to supply the product on a specific date. This means the smart contract will be able to enforce a transfer of ether currency from the seller to the buyer with interest.
So, Ethereum is coming to solve the challenges of verification, facilitation, and enforcement of a contract. However, let us keep in mind that users are charged a very minuet fund for verification, facilitation of enforcement of any smart contract, and currency used for smart contract charges is Ether. Ether is the cryptocurrency that is used to implement a smart contract in the Ethereum network.
While the two cryptocurrencies are the most popular, there are others like the ripple. Ripple cryptocurrency is designed to solve the fund transfer challenges experienced by banks, especially where both banks are not in the same country. So, ripple is a solution for banks and by banks.
Then we also have the recent media-motivated dogecoin that is aimed at replacing Bitcoin in the long run. Bitcoin has a short lifespan, which means that bitcoin can only be mined for some more years after which bitcoin miners will stop earning from mining bitcoin. So dogecoin is aimed at replacing bitcoin in decentralized financial transaction mode and eliminating the middleman.
All these solutions are still in the infant stage of acceptability to the public. For now, most users of this decentralized system are using it to make money via cryptocurrency trading, however, once the solutions become accepted by the public, so will be the currency that fuels the solution.
