Three major reasons tell you: Why is decentralization crucial?

Author: Asira S

Compilation: Vernacular Blockchain

Cryptocurrencies are attracting widespread attention worldwide. El Salvador has designated it as fiat currency, requiring merchants to accept it as if they were cash; meanwhile, the U.S. blockchain summit attracted billions of dollars in companies to flock to the Web3 space.

Behind this boom, cryptocurrencies such as Bitcoin and Ethereum are more than just money itself, and they are redefining how currencies work.

However, the complex terminology and overwhelming information confuses many people, as if everyone assumes that you already understand. In fact, many people are still trying to understand the real value and significance behind cryptocurrencies.

So, what is a decentralized currency?

Imagine how you would transfer money if Venmo, PayPal and your bank disappeared overnight?

This is a reality for millions of people around the world.

But the problem is more than just accessing banking services (although it's a big problem). But who is controlling the currency itself.

Now, when you transfer money, you are not really transferring money by yourself. You are requesting a bank or payment processor for you. They are middlemen, they charge multiple fees, decide who can or cannot use their system, and have the right to freeze or block transactions at any time.

Decentralized currency eliminates all this. Simply put, you can transfer money directly to others through a digital wallet without going through multiple banks. A blockchain composed of a global network of computers is verified and recorded transactions through cryptography and code.

No company, no country, no CEO can intervene to stop it.

Unlike banks, decentralized currencies like Bitcoin, Ethereum and other cryptocurrencies run 24/7. No business hours. There is no "processing time" waiting. Banks don't have weekend breaks.

This is not just a matter of speed, but a matter of control.

Why is decentralized currency important?

For the first time in history, people can send, store and control their own funds without bank or government approval. If you live in a country with a stable banking system, this may not seem like a big deal. But for millions of people, decentralized currency equals survival.

1. No one can freeze or stop your funds

The state and banks can (and do) freeze their accounts if they see fit.

Take Canada in 2022 as an example. During the truck driver protests, the state freezes the bank accounts of protesters and donors without court orders. Or in Nigeria in 2020, the state closed bank accounts of activists supporting the #EndSARS movement (protest against police violence).

In both cases, the state believes that doing so is necessary. But what is the price? When you take away someone’s money, you deprive them of their ability to eat, pay rent and survive.

With Bitcoin and decentralized currencies, this won't happen. If your assets are traded in a self-custodial wallet or through a decentralized trading platform (DEX), no bank, state or company can freeze, block or confiscate them. This suddenly is not just financial freedom, but basic human rights.

2. Provide services to people without bank accounts

Think about this now: 1.4 billion people around the world do not have bank accounts. Not because they don’t want to have it, but because they live in places without financial infrastructure, without proper documents, or are restricted by the state.

In El Salvador, more than 70% of the population had no bank accounts before Bitcoin was adopted as fiat currency. Nowadays, people can send, receive and save money without a bank.

For billions of people, decentralized currencies are not only an alternative, but the only viable option.

Moreover, in addition to basic banking services, decentralized finance (DeFi) is becoming a powerful alternative to traditional financial services.

3. Potential anti-inflation protection

Even if you can use banking services, inflation can erode your savings. Inflation means that your money can buy less and less over time.

The state controls traditional currencies, and when they print more currencies, the value of the currency falls. This is exactly what happened in Venezuela, Zimbabwe and Lebanon, and inflation has destroyed people’s savings.

The supply of Bitcoin is fixed at 21 million. There is no country that can add printing, and no central bank that can change the rules at will. That's why some people call it "digital gold."

In the short term, prices fluctuate very quickly. But in the long run, some believe that it will become a strong store of value due to its fixed supply.

Bitcoin is not the perfect anti-inflation tool. But it is a currency alternative that is not under the control of the state. For many people, that's enough to get them to pay attention to it.

Decentralized currency changes everything

Bitcoin and decentralized currencies Not only Bitcoin and decentralized currencies have much more significance than the financial field. For some, they offer cheaper and faster ways to transfer money; for others, they are potential anti-inflation tools; for millions of people around the world, they are the only way to access financial services.

Cryptocurrencies and the technology behind them are not perfect, and there are risks, but it is driving us to rethink how currency works. This is the first time in human history that people have access to a financial system that is not controlled by banks or states.

Whatever our attitude towards it, decentralized currencies are already shaping the future.