Advantages of a crypto-economy

As the cryptocurrency movement continues to gain momentum, many are speculating on what a cryptocurrency economy would look like. Here, we will look at some of the advantages and disadvantages of a cryptocurrency economy. First up: advantages.


One of the main selling points for ICOs, and for cryptocurrencies in general, is the decentralized nature of the technology. The current economy based on fiat money requires a central bank to print and store cash, which puts all the control in the hands of a select few people. This means that if something goes wrong in a centralized structure, the whole system collapses. With a decentralized structure, the system carries on even if a few of the nodes break down. A decentralized economy would reduce corruption and help build the trust of citizens in their economy.

No manipulation

Because of the decentralized nature and limited supply of cryptocurrency, it would be difficult, if not completely impossible, to manipulate the value of it. This may sound strange given that every other story about cryptocurrency has to do with market volatility. However, fiat money comes with the issue of inflation. When too much money is printed, the value of all the money in circulation goes down. Because there is no limit to how much money can be printed, there is no limit to inflation and decrease in value. Cryptocurrencies are issued in a limited supply, which means that inflation would be impossible.

No production costs

It takes money to make money, as the saying goes. Although the saying refers to making business investments in order to make a profit, it is also the quite literal truth about money. Physical fiat money has to come from somewhere, and it costs money to design, manufacture, and distribute the cash. As a matter of fact, it sometimes costs more to produce money that it is worth. As of 2016, it costs $0.015 to produce a 1 cent coin in the United States. Since cryptocurrency is strings of code rather than physical money, this issue would be solved completely.

More security

Another cornerstone selling point of cryptocurrency is the security. Again, this might seem a bit odd considering the recent hack on Coinrail. While it is true that no kind of currency will be completely safe from criminals, cryptocurrency does have an advantage over fiat money. All cryptocurrency transactions are verified and recorded on the blockchain, which means that they can be traced back at any time. This system will help decrease the rates of fraud, which will ultimately make the economy safer.

No intermediaries

The peer-to-peer nature of most cryptocurrency transactions means that many middlemen and intermediaries will be out of a job in a crypto-economy. While this is of course bad news for people who make a living from handling money, it is great news for everyone else. Because cryptocurrency changes fewer hands than fiat money for the purposes of a transaction, it means that transactions will be both cheaper and faster.

Stay tuned for tomorrow’s article where we look at some of the disadvantages of a crypto-economy.


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