In the caveman era, people used the barter system, in which goods and services are exchanged among two or more people. For instance, someone might exchange seven apples for seven oranges. The barter system fell out of popular use because it had some glaring flaws:

• People’s requirements have to coincide—if you have something to trade, someone else has to want it, and you have to want what the other person is offering.
• There’s no common measure of value—you have to decide how many of your items you are willing to trade for other items, and not all items can be divided. For example, you cannot divide a live animal into smaller units.
• The goods cannot be transported easily, unlike our modern currency, which fits in a wallet or is stored on a mobile phone.

After people realized the barter system didn’t work very well, the currency went through a few iterations: In 110 B.C., an official currency was minted; in A.D. 1250, gold-plated florins were introduced and used across Europe; and from 1600 to 1900, the paper currency gained widespread popularity and ended up being used around the world. This is how modern currency as we know it came into existence.

Modern currency includes paper currency, coins, credit cards, and digital wallets—for example, Apple Pay, Amazon Pay, Paytm, PayPal, and so on. All of it is controlled by banks and governments, meaning that there is a centralized regulatory authority that limits how paper currency and credit cards work.

Traditional Currencies vs. Cryptocurrencies

Imagine a scenario in which you want to repay a friend who bought you lunch, by sending money online to his or her account. There are several ways in which this could go wrong, including:

• The financial institution could have a technical issue, such as its systems are down or the machines aren’t working properly.
• Your or your friend’s account could have been hacked—for example, there could be a denial-of-service attack or identity theft.
• The transfer limits for your or your friend’s account could have been exceeded.

There is a central point of failure: the bank.

This is why the future of currency lies with cryptocurrency. Now imagine a similar transaction between two people using the bitcoin app. A notification appears asking whether the person is sure he or she is ready to transfer bitcoins. If yes, processing takes place: The system authenticates the user’s identity, checks whether the user has the required balance to make that transaction, and so on. After that’s done, the payment is transferred and the money lands in the receiver’s account. All of this happens in a matter of minutes.

Cryptocurrency, then, removes all the problems of modern banking: There are no limits to the funds you can transfer, your accounts cannot be hacked, and there is no central point of failure. As mentioned above, as of 2018 there are more than 1,600 cryptocurrencies available; some popular ones are Bitcoin, Litecoin, Ethereum, and Zcash. And a new cryptocurrency crops up every single day. Considering how much growth they’re experiencing at the moment, there’s a good chance that there are plenty more to come!