Bitcoin was the first, but it is really the best? What are we really looking for in a crypto when we want to buy and sell stuff in the course of our day to day lives?
If I am buying something with crypto I am looking to use one that is secure, stable, fast to transact with very low fees. That doesn’t exactly sound like Bitcoin – whichever flavour you are into.
According to Wikipedia there are now over 900 cryptocurrencies available on the internet and while I haven’t investigated them all, I have been working my way through them to evaluate whether they are suitable for the job. Let’s have a quick look at the four criterion I’ve listed above and see if we can find one of these 900 cryptocurrencies that will meet my requirements.
1. Secure – Most cryptos are secure from a cryptographic perspective and you might be hard pressed to find a crypto which uses really bad cryptography. But security is more than that, a good crypto needs to be secure against counter-party risk and centralization. A crypto like Tether fails this criteria because if the bank or organisation holding the deposited funds goes down then it collapses. Same with BitConnect and their in-house exchange. Basically any crypto which has a single point of failure, either technical or organisational, is out. So too is any crypto which is too centralized and is in danger of being hijacked or forked. That rules out a lot too – including Bitcoin, which has both heavily centralized mining AND is gearing up for yet another fork this November.
2. Fast To Transact – If I am buying a cup of coffee at the local café, I don’t want to be waiting for a 10 minute block time and then however many confirmations required on top of that. I want very quick block times, maybe just a few seconds. If cryptocurrency is ever going to have a hope of breaking into the mainstream then payment needs to be just as fast as VISA or EFTPOS, if not faster. So once again Bitcoin fails here and so do a LOT of others. For a while I thought DASH or PIVX and their InstantSend feature could be a winner here so let’s put them on the short list for a moment.
3. Low Fees – Again using the cup of coffee example, I am spending a couple of dollars here and so the fee on that transaction needs to be very low. Maybe just a couple of cents maximum. VISA charges merchants in the vicinity of 1.5% per transaction and it needs to be better than that. On a cup of coffee costing say $2 that means transaction fees need to be maybe 3 cents maximum. Let’s rule out Bitcoin for the 3rd time with its transaction fees higher than the cost of the coffee in the first place.
4. Stable – The value that the crypto represents needs to be stable. No merchant or customer wants to have money in their wallet or bank account which fluctuates wildly. It is far too big a risk for the mainstream to be operating with a volatile currency and the mainstream are NOT currency speculators. To get confidence of the mainstream to use a crypto you need trust that it’s value is not going to drop before it can be spent.
This is the killer for most cryptocurrencies right now and while people reading this blog might be accustomed to speculation and volatility in the crypto market it is a massive liability for mainstream adoption. Just for fun lets rule out Bitcoin for the 4th time after it went from near $5K to $3K (a drop of 40%) in under 2 weeks this September. DASH and PIVX can be struck from our short list too.
So what cryptocurrency exists that can meet all these criteria?
Well, I have found one and it was in a place that I least expected to find it.
Now some of you might laugh and write this post off straight away but I ask you to stop and think about it for just a moment before you do.
It is Secure with no single point of failure from a technical or organisations perspective. The Graphene technology and it’s witness infrastructure ensure it is supported by a strong and self-healing network.
It is Fast To Transact with 3 second block times
It has Low Fees of basically ZERO. All you need is a few Steem vested into Steem Power and you have FREE transactions. Ok, so maybe you can count that as an opportunity cost if you’re being pedantic but it is still negligible.
It is Stable and this is the toughest one. STEEM DOLLARS are backed by Steem and are basically a debt instrument (not unlike our existing currencies) whereby the Steem network promises to redeem each STEEM DOLLAR for $1 USD worth of STEEM. Admittedly, it does fluctuate a little bit with the large capital flows of the overall crypto market, but really it shouldn’t because its value will ALWAYS return to $1 USD.
As an added bonus the barrier to adoption is even further reduced for everyone already transacting in US Dollars. No need to change price tags or invoices!
So ask yourself the question, if you were buying a cup of coffee down the road, would you be happy to pay in STEEM DOLLARS? Would you be happy to be paid in STEEM DOLLARS?
Is it that much of a stretch to imagine that in the future small businesses will create a profile on Steemit to put up specials and communicate with customers….and then buy and sell products and services with them VIA the platform?
Images and Credits
http://www.azquotes.com
https://emergingequity.org
http://advantagebizmag.com
https://www.dashforcenews.com
http://www.prosigns-eg.com
http://mantralogix.com
https://www.weworked.com
https://www.meetup.com
https://transom.org
http://innovatechnologies.net