Today’s financial system experiences a host of problems that, in most cases, deny people access to financial services. Poverty rates continue to rise when users are financially excluded Statistics record the unbanked population at around 2 billion worldwide.
launch of Bitcoin in 2009 by Satoshi Nakamoto aimed to replace the traditional financial caral with a faster and more advanced architecture. result is evident as the number of digital currencies continues to rise, racking up a market capitalization of $ 1.48 trillion as of this writing.
Financial freedom is one of the factors that contributes significantly to the growth of virtual currencies. Very soon, cryptocurrencies could change the perception of democracy in different parts of the world. Below is a breakdown of what the future of democracy and financial freedom looks like in cryptocurrencies.
Democracy, liberation and digital currencies
Virtual currencies establish financial freedom and democracy through the following ways:
Decentralization in the crypto sphere refers to a crypto asset that is not followed by any central authority. Unlike traditional financial institutions, which follow regulations formulated by monetary authorities, cryptocurrencies use a different approach executed by nodes located in other parts of the world.
decentralization factor promotes democracy because no entity owns or controls the blockchain network. It also returns control and freedom to users rather than financial institutions, which take custody once the money is deposited into a bank account.
Additionally, crypto decentralization is an essential requirement necessary to establish financial freedom because no entity will monitor a user’s funds.
A consensus approach in a blockchain network ensures that transactions are validated without the need for intermediaries. In normal circumstances, banks act as intermediaries for the user, facilitating the operation of the transaction. Additional bank charges also apply, making basic transactions more expensive.
However, cryptocurrencies provide a cheaper alternative that employs agreements between participants on a blockchain. In this way, a user can experience financial freedom with a blockchain network that supports local and international crypto transactions at minimal fees. At the same time, the democratic aspect is instilled through consensus mechanisms, as the community participates in invalidation procedures that generate lucrative income.
Cryptocurrencies make it easy for users to access funds, mainly through cryptocurrency lending platforms. However, applying for a loan in the traditional configuration is time consuming and results in higher interest rates once the loan is approved.
As such, this factor inhibits the general meaning of financial freedom, as loan disbursement procedures favor only a select number of people. However, the Decentralized Finance system, which hosts most of the lending platforms, exposes users to a hassle-free ecosystem offering loans at a cheaper interest rate.
aspect of transparency is applied in the blockchain system, so that all the information registered in the network remains immutable. refore, cryptocurrencies based on DLT solutions empower democracy by publicly recording and displaying transactional information. Furthermore, validators can reject the inclusion of any fraudulent transaction in a blockchain.
Cryptocurrencies grab everyone’s attention, making them a suitable payment tool similar to regular fiat currencies. Basically, users can freely pay for goods and services using digital currencies like ETH, BTC, LTC, and many more.
Etsy, a US-based marketplace, allows its sellers to add a crypto payment option to their stores. Once the seller accepts crypto payments and a buyer clicks on that alternative, the sender will respond with an address where the users are located. refore, in addition to fiat currencies, buyers have the freedom to use Bitcoin and other cryptocurrencies for payments.
Owning certain cryptographic tokens / assets allows investors to exercise governance rights on a blockchain network. Basically, the owners participate in the voting of the different proposals presented by the community. refore, democracy is strongly reflected in the community governance function as users shape the future of a crypto platform.
Also, having more crypto assets gives users more influential privileges to suggest development proposals. Currently, digital governance coins represent a market capitalization of $ 14.24 billion.
An increase in the value of cryptocurrencies also contributes to financial independence. Investors actively engage their funds, no matter how small, in cryptocurrency trading and end up generating more returns in the long run. Volatility issues can hamper this progress; However, traders can generate great wealth with the right strategy. As governments suppress the purchasing power of fiat currencies, cryptocurrencies become a viable option for many, thereby increasing their values.
Possibility of obtaining passive income
Passive income earned through cryptocurrencies opens a new path to financial freedom. Users can choose to invest in simple initiatives, such as gambling, which involves locking a crypto asset for a set period and collecting profits once the set period is complete. Hodling is another way that users can earn money through cryptocurrencies. In this case, users keep their cryptocurrencies and only sell them when the digital asset exceeds its initial purchase price.
Cryptocurrencies offer users the opportunity to experience financial freedom and a democratized infrastructure governed primarily by the community. Through their decentralized architecture, digital currencies allow everyone to manage and have maximum control over their funds.
More importantly, cryptocurrencies allow anyone to access financial services in the DeFi ecosystem, allowing investors to focus more on trading digital assets. Very soon, the traditional adoption of digital assets and blockchain technology will lead the enthusiasts on board towards a community-based system loaded with financial sovereignty.
Wayne is a Blockchain enthusiast and cryptocurrency trading expert. Currently, he deals with trending topics in digital currencies.
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