Why Do We Need Cryptocurrency?

I've been asked many times why anyone would decide to use a digital currency.  What purpose does such a construct fulfill?  The response has always been the same:  The reason for the creation of cryptocurrency is very simple.  An individual can purchase a book with cash in thousands of stores around the world, if not millions.  The person walks in, selects the book they desire to read, exchanges a few legal tender bank notes with a cashier, and walks out.  On the internet, however, things are quite different.  Cash can not be used on the internet.  In fact, in order to purchase anything on the internet, an individual must have been pre-approved for a bank account, a credit card, or a digital payment account similar to PayPal.  In establishing any of those accounts, the person's anonymity is sacrificed.  Paying for something and remaining anonymous on the internet today, although not impossible, is clumsy and difficult.  Except for the case of a prepaid gift card purchased with cash (which would require numerous trips to the store to purchase the prepaid gift cards in the first place), the individual's identity will always be linked to the payment account.  There are a number of payment processors that will not even accept prepaid cards, exactly because of the anonymity of the transaction.  No doubt this is one of the reasons that we are accelerating ever faster into a cashless society.  The amount of data that can be mined (and subsequently sold) by monitoring an individual's purchasing habits is almost limitless.

If an individual wishes to remain anonymous on the internet, does this necessarily imply that they are doing something illegal (or at the very least nefarious?)  Absolutely not.  Identity theft is rampant in our modern world.  After an item is purchased online, an individual has no control over how the company safeguards his or her information.  Even companies with reasonable data retention policies are susceptible to security breaches, so it's not unfair to say that simply making an online purchase can leave one vulnerable.  Keeping your personal information private and out of the hands of hackers is one of the foremost reason to only provide personal information when absolutely required.  The more private you keep your sensitive information, the less chance of hackers hijacking your identity. 

 

There are other very legitimate reasons to wish to remain anonymous during an online transaction.  Purchasing items related to a medical condition may be a very legitimate reason for desiring privacy.  An individual may not want to broadcast the fact that they have a condition to the retailer.  Perhaps an individual wants to purchase something as part of an anonymous gift exchange but does not want it shipped to them so that they can re-send it (or knowing that the city/state you mail from may give you away).  Perhaps an individual wants to contribute to a political or activist group but worries about government surveillance (because we all know that the government doesn't have any watch lists...)

These are a few of many legitimate reasons to wish to remain anonymous when purchasing something online.

This is exactly the niche that cryptocurrencies fill.