update 19 August 2021

The Future of Democracy and Financial Freedom with Cryptocurrencies

The current financial system experiences a myriad of issues that, in most cases, denies individuals access to financial services. Poverty rates continue to increase when users are financially excluded as statistics register the unbanked population to about 2 billion worldwide. 

The launch of Bitcoin in 2009 by Satoshi Nakamoto aimed at substituting the traditional financial model with a fast and more advanced architecture. The outcome is evident since the number of digital currencies continues to increase, accumulating an overall market cap of $1.48 trillion at the time of writing. 

Financial freedom is among the significant contributors to the growth of virtual currencies. Soon enough, crypto could change the perception of democracy in different parts of the globe. Below is a breakdown of how the future of democracy and financial freedom lies within cryptocurrencies.

Democracy, Liberation, and Digital Currencies

Virtual currencies establish financial freedom and democracy through the following ways:

  • Decentralization

Decentralization in the crypto sphere refers to a crypto asset that does not follow any central authority. Unlike traditional financial institutions, which follow regulations formulated by monetary authorities, cryptocurrencies utilize a different approach managed by nodes situated in other parts of the globe. 

The decentralization factor promotes democracy because no single entity owns or controls the blockchain network. It further brings control and freedom back to users instead of financial institutions, which assume custody once money is deposited in a bank account. 

Furthermore, crypto decentralization is an essential requirement needed to establish financial freedom because no entity will oversee a user’s funds.

  • Consensus Mechanisms

A consensus approach in a blockchain network ensures transactions are validated without the need for intermediaries. In normal circumstances, banks act as a user’s intermediary facilitating the transaction operation. Additional bank charges also apply, making basic transactions more costly. 

However, cryptocurrencies provide a cheaper alternative that employs agreements between participants in a blockchain. That way, a user can experience financial freedom with a blockchain network supporting both local and international crypto transactions at minimal fees. At the same time, the democratic aspect is instilled through consensus mechanisms since the community takes part in invalidation procedures that generate lucrative incomes.

  • Easier Access to Funds

Cryptocurrencies make it easier for users to access funds, mainly through crypto lending platforms. However, requesting a loan in the traditional setup consumes a lot of time and attracts higher interest rates once the loan is approved. 

As such, this factor inhibits the overall meaning of financial freedom as loan disbursement procedures favor only a select number of people. Nonetheless, the Decentralized Finance system, which hosts most lending platforms, exposes users to a hassle-free ecosystem offering loans at a cheaper interest rate. 

  • Transparency

The transparency aspect applies in the blockchain system, whereby all information recorded in the network remains unchangeable. Thus, Cryptos based on the DLT solutions empower democracy by publicly recording and displaying transactional information. What’s more, validators can decline the inclusion of any fraudulent transactions in a blockchain. 

  • Real-World Use Cases

Cryptocurrencies attract the attention of everybody, making them an appropriate payment tool similar to ordinary fiat currencies. In essence, users can freely pay for goods and services using digital currencies such as ETH, BTC, LTC, and many more. 

Etsy, an American-based marketplace, allows its sellers to add a crypto payment option in their shops. Once the seller accepts crypto payments and a buyer clicks on that alternative, the sender will reply with an address where users. Thus, aside from fiat currencies, shoppers have the freedom to use Bitcoin and other cryptocurrencies for payments.

  • Community Governance

Holding certain crypto tokens/assets allows investors to exercise governance rights in a blockchain network. In essence, holders participate in voting for various proposals put across by the community. Thus, democracy is highly reflected in the community governance feature since users shape the future of a crypto platform. 

Additionally, holding more crypto assets ultimately gives users more influential privileges on suggesting development proposals. Currently, digital governance coins account for a market cap of $14.24 billion.

  • Increasing Crypto Values

A surge in the value of cryptocurrencies also contributes to financial independence. Investors actively commit their funds-no matter how little-into crypto trading and end up generating more returns in the long run. Volatility issues may hinder such progress; however, traders can build a massive wealth with the right strategy. While governments suppress the purchasing power of fiat currencies, cryptocurrencies become a viable option for many, therefore increasing their values. 

  • Ability to Earn Passive income

Passive income acquired through cryptocurrencies opens up a new path to financial freedom. Users can choose to invest in straightforward ventures such as staking, which involves locking a crypto asset for some period and gathering profits once the set period is complete. Hodling is another way users can earn via cryptocurrencies. In this case, users hold their crypto coins and only sell them when the digital asset surpasses its initial buying price.

Conclusion

Cryptocurrencies present users with an opportunity to experience financial freedom and a democratized infrastructure governed mainly by the community. Through their decentralized architecture, digital currencies allow everyone to manage and have ultimate control over their funds. 

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More importantly, cryptocurrencies enable anyone to access financial services on the DeFi ecosystem, thus empowering investors to focus more on digital asset trading. Soon enough, mainstream adoption of digital assets and blockchain technology will lead onboard enthusiasts towards a community-based system loaded with financial sovereignty.