Common currencies are controlled by the government that issues the currency. This is what is called centralized currency or finance. This is the reason why every country in the world has a different currency from the rest unless in situations where some countries have agreed to accept and use currencies from other countries. Due to the existence of centralized currencies, some countries suffer from challenges due to the use of different currencies.
Cryptocurrency has the potential to solve most of the challenges for people all over the world. The reason why this is the case is that cryptocurrencies work under Decentralized Finances. Decentralized Finances mean that a single entity does not control the currency or the financial situation. Governments and their central banks have the ability to control their currencies and perform some tasks that affect people negatively in one way or another. But since cryptocurrencies are decentralized, they can solve most of the problems caused by centralized currencies. Some of the problems solved include;
The first is money transfer. Currently, the internet has turned the world to be a global village. People can communicate and perform business all over the world without moving from one place to another. But the main challenge that has existed has been how to transact money from one person to another in different countries without a long process. People have to fill up forms and prove where they got their money from before sending it. The receiver also has to go through a bureaucratic process before they can access the money sent to them—all these processes are due to the use of centralized currencies. Decentralized currencies do not need all these processes. While it takes centralized currencies over a day to transact money, decentralized currencies only require less than a minute to transact the money from one person to another. For such transactions, people prefer to use stable coins such as Tether USDT, which has the same value as the American dollar, and the fluctuation rate is low. The other advantage of doing this is that people do not have to pay high charges on Forex when converting currencies.
DeFi can serve many financial practices, but it can do more than this. Almost everybody has heard about NFT by now. NFTs can be applied in many ways other than how they are currently being used. People from all over are developing digital art, selling them as NFT, and making millions of dollars. Other ways NFTs can be used include creatives selling directly to their clients. In most cases, creatives such as musicians use record labels to sell their products to the masses for a huge percentage of the gains. If creatives decide to sell directly to their fans through NFTs, their supporters will own shares of their music and make money from their favorite celebrity. NFTs can also be used in tracking and updating records for various purposes. Education institutions can use the system to update their students’ certificates to avoid people who forge certificates to get jobs. Hospitals, retail stores, and healthcare can also use the system to improve their services. The government can also use the technology during voting to avoid rigging, as commonly done in Africa.