You’re a passionate believer in Crypto.

Yet your friends take you for a fool.

“It’s a scam.”

“It’s a Ponzi.”

“It doesn’t solve anything.”

However, that’s far from the truth.

Crypto is already solving great problems and it’s being endorsed by the very same people and entities that publicly denounce it.

It isn’t about Crypto’s lack of potential, it’s simply that the majority of people are sleeping on the wheel.

If you’re reading this, chances are you’re not.

Because Crypto is actually saving lives now but nobody is telling you. In fact, it is being chosen as the preferred currency to distribute to those in need.

But why?

The United Nations and Crypto

I’ll get to the point.

The United Nations is sending USDC, a crypto stablecoin pegged to the US dollar, to displaced Ukrainians.

Through a new blockchain-based program, the United Nations will send this crypto token to those in need so that they can redeem it in exchange for the fiat currency of their choice between euros, dollars, or local currency.

This is surprising, right?

I mean, why not send them euros, or dollars?

To answer that question we need to comprehend why Crypto is the superior asset in this case — it’s almost always superior, they’re simply not willing to tell you that yet.

You can’t say to understand Crypto if you don’t know the two concepts that differentiate cryptocurrencies from traditional fiat currencies: trust and perceived value.

The concept of trust

Historically, currencies have always been backed by another asset. That is, in order to measure its value, currencies could be converted into another asset, usually gold.

This allowed society to trust the value of these coins as valuable mediums of exchange.

However, in 1971 the United States Government ended this convertibility option, known as the gold standard, and from that moment onwards the US dollar was backed by… nothing.

Yeah, nothing.

And how did they maintain the US dollar’s position as the world’s reserve currency (the preferred asset choice for central banks around the world to store their money in)?

It’s way more complicated than this, but in a nutshell, they forced the world to use dollars as the main currency to buy the new gold, oil — hence the concept of the petrodollar.

Oil was super important at the time, so forcing people to use dollars to buy it allowed the US dollar to maintain its powerful position as the world’s reserve currency.

The more used your currency is, the more valuable it is. Simple.

In layman’s terms, all this means that fiat currencies are simply backed by trust, society’s trust that the asset in question is valuable.

Therefore, when trust is lost, fiat currencies quickly evaporate in value.

To prevent this, systems that use fiat currencies require several ‘trust enablers’, like banks or escrows for example, that ensure that transactions are executed in a timely and legal manner.

Without them, the system crumbles, as no one can determine whether the transactions may or may not occur and if they’re legal.

In contrast, cryptocurrencies are backed by a distributed ledger that works ‘on automatic’, thereby without requiring those ‘trust enablers’.

This is the reason why people describe public blockchains, blockchains that use cryptocurrencies, as ‘trustless systems’.

In summary, while fiat-currency-based systems require society’s trust to function properly, cryptocurrency-based systems don’t.

They simply work, and without all the fees that banks and the other middlemen take for providing trust to the network.

Perceived value

In order to define the financial value of something, we need to find its relative value to another asset. For instance, we can value gold in US dollars per ounce.

But as we described earlier, fiat currencies are no longer backed by anything.

Thus, how can we derive their value?

In the case of fiat currencies, we still need to compare them to another asset to define their value, so we tend to use exchange rates to do that. For example, we compare the US dollar to the euro to define the value of one with regard to the other.

To define this, people price in the usage of the currency to understand how desirable one currency is in comparison to another.

In the case of cryptocurrencies, the concept is similar but, truth be told, today cryptocurrencies are valued mainly on speculation because none of them are widely used as mediums of exchange worldwide.

They are valued at the price that the Crypto market perceives they have, not because they have a proven track record of utility as a currency.

But if this tells us that Crypto is not an ideal medium of exchange today, why is the United Nations sending Crypto to displaced Ukrainians?

This brings us to stablecoins and the real reason cryptocurrencies are superior in this case, delocalization.

I don’t care where you live, I just need your wallet address

No boundaries.

You want to send me money? Just do it then.

This is an informal way of explaining that the uber-complex world of cross-border payments becomes an “arduous” 30-second task with Crypto.

While traditional finance is a huge, compounded system of interoperable, geographically-bounded networks that require centralized players to work, distributed ledgers are not bounded by any limits, and are simply global.

If you have access to the internet and you have a wallet for that specific ledger, you can use it, no matter where you are.

And this is a feature that applies brilliantly in the case we are discussing today.

When money logistics aren’t a problem anymore

Displaced Ukrainians have plenty of problems right now.

It’s a matter of survival.

And yet, they still have to worry about switching currencies and figuring out exchange rates… all the while having to figure out what they’ll it today.

By sending them USDC, these people can “carry” their money in their smartphones, and convert this USDC to US dollars, euros, or local currencies through MoneyGram locations, in the thousands in these areas.

If they travel abroad, this USDC can also easily be ramped-off (turned into fiat) like you would. But this isn’t as simple as the other option, which explains the need for the MoneyGram ramp-off.

And with no middleman fees.

But there’s more. With Crypto, forget about delays.

Instant settlement shouldn’t be a feature, but it is

The moment a Crypto transaction gets approved, it’s automatically final.

Thus, if the blockchain you’re using has a TTF (Time-to-finality) of seconds, this means that it takes mere seconds for you to send money to other people at another point in the world, and that transaction settlement is instant.

This process, in case you don’t know, takes literally days in traditional finance, as in some cases more than 10 entities have to participate in the trade to validate it, which by the way makes it a lot more expensive for you.

And that’s simply for you to get your money.

After that, final settlement, the moment the transaction becomes irreversible, can take longer.

This opens the possibility of getting your transaction reversed, which isn’t as weird as you probably think, and the implications can be really bad for you.

For instance, let’s say you buy a piece of art.

Like in any art form, there’s a small chance that it was stolen. If that’s the case and the police finds out, they will immediately request you, request being an euphemism, to give it back.

But that’s fine, right? I get my money back and that is that.

Well… no.

In the majority of cases you lose your money anyways.

Suddenly, you have no money and no art.

In fact, these types of procedures go through tort law, and tort law in the majority of countries won’t allow (or at least help) you to get your money back.

A pad in the back, a mere “next time use a more trustworthy seller” small talk and off you go.

Needless to say, getting your transactions reversed is no small joke, and that’s not possible with Crypto.

But I sense what you’re thinking.

All this is, all in all, impressive. But we must be real with ourselves, Crypto is beyond perfect right now.

What are the challenges it still needs to figure out?

Currency at scale and decentralization

I’ll be clear.

All the great things I’ve claimed that Crypto has, depend on a huge nuance that almost all blockchains fail miserably to achieve.

Only really decentralized blockchains can attest to these features. And that leaves us only a handful of blockchains that meet the standards.

If a blockchain isn’t really decentralized, it can easily have its blocks “reorged”, which means that a hacker could introduce illegal transactions or double spend on others by gaining control over the majority of the network.

As transactions are validated and approved by consensus, if the hacker possesses the majority of hashing or staking power, he can reorganize his/her balance as he/she pleases.

Consequently, with no decentralization there’s no security, with no security there’s no irreversibility, and with no irreversibility everything mentioned in this article is pointless.

If double spending can occur (when people ‘spend’ money they don’t have, essentially printing money) the system isn’t trustless anymore and, thus, fraudulent.

Apart from that, blockchains really don’t scale that much as of right now (‘scale’ is the capacity to handle orders of magnitude more transactions without a proportional increase in fees and time).

And the majority of proposed solutions for scaling are essentially centralizing the chain in lieu of greater scalability, which defeats the purpose of the blockchain in the first place.

So you may be asking, what’s the future of blockchain architecture then?

In my opinion, and I’m clearly entering speculation territory, the biggest breakthrough in this sense is using application-specific blockchains connected one with the other, a concept known as modular blockchains, and using zero-knowledge rollups as the main execution layer for transactions.

This architecture promises no security trade-offs and would be capable of scaling at ease.

The challenge?

Proving it.