There are many who see digital currencies as just a passing trend. Others, see it as a much needed update to the banking and money wiring industries. Here are a few reasons why we know the latter is the winner. Let’s start with transaction fees. Customers can relate to this, because they want to circumvent the fees associated with the credit cards they use, but in the case of the sellers, the situation is more obvious.
What Merchants have to Gain
If you are a merchant and you wish to find a payment processing company to do business with, finding the right one can be a difficult task, because between the large number of companies available, not many are without complaint. Many merchants are discontent about, or downright hate, the company they use for payment processing, because of the statement fees, the intercharge fees, the cancelation fees, the lack of customer support and the overpriced payments hardware. Cryptocurrency can do a lot of good here, something that any other type of currency may fail to do.
Getting the merchants to trust and use cryptocurrency as a method of payment is another story. We are talking about the general merchants, who are not early adopters and don’t necessarily sell virtual products. They have reasons to be skeptical because what trust can someone have in a currency that peaks and plummets on a regular basis and that has a lot of illegal activities associated with it. The solution here would be that the same people who think about algorithms and mining to come up with a way to keep the value of the coin stable. This might require a currency that is not as decentralized as Bitcoin.
It is possible that the mining process can be improved, because Bitcoin has one third of the energy usage of the whole banking sector while storing a value totaling the equivalent of 1% of that existing in the banking sector. It is uncertain how it will scale if the price of Bitcoin rises, because then there will be more resources dedicated to mining, but alternatives that use energy more efficiently exist.
However efficient or inefficient mining will be it will not affect the future prospects of cryptocurrency in general because there already are coins that are based on different algorithms, such as scrypt, or that dodge the need of mining altogether by being pre-mined, such as Ripple.
Currencies that Give Back to the Community
Another reason why cryptocurrency has a set place in the future is that some currencies are useful for the community or give other rewards for participating in their development. Gridcoin operates with both a Proof of Work algorithm and with a software called BOINC or Berkley Open Infrastructure Network Computing Grid. Miners can benefit from a larger reward of coins if they allow the software to use their computer’s resources for scientific research, such as medicinal applications, global warming or pulsars.
The Ripple developers also have shown that they want to support their community by making special deals for innovative businesses and giving their XRP away to early adopters or charities. Ripple also has a reward in the form of “negative interchange” that it opposite of what credit companies are doing. Users can benefit from this reward by using the merchants associated with the Ripple network. Last year, Ripple Labs had a program called Computing for Good that was similar in scope to what Gridcoin is trying to accomplish. Similar programs may appear which will contribute to the widespread and recognition of the supporting coin.
Solarcoin is yet another example of how companies can use cryptocurrencies for the general good. Users can receive Solarcoins simply by providing the proof that they have solar panels and they produce solar energy, therefore contributing to the propagation of green energy.
Identifying the usefulness and the benefits that a coin brings to the community can be a good method to separate the coins with real growth potential from the scams that are sometime present in the market.