The Effect of Cryptocurrency On The Global Economy
The world is continuously changing, and at the rate at which digitalization is taking over the world, the traditional financial currencies will no longer hold the fort. The need for digital currency will dominate to address the financial needs that are continuously growing. Blockchain technology is emerging to tear down the borders and to cope up with financial needs.
For a long time, the discussion about crypto-currency as an emerging financial asset has been conducted. Cryptocurrency facilitates a useful and accessible way to deal with capital and financial services to allow socio-economic growth in developing countries. Hence crypto-currency is finding a way into our lives for economic growth and shaping a better future.
Millions of people are getting an opportunity to invest, spend and save money through blockchain technology due to the benefits it brings to the financial table. The impact of cryptocurrency on the global economy can not be ignored. But before going into its details, let’s understand what cryptocurrency actually is.
So what is cryptocurrency?
Cryptocurrency is a digital currency with some amazing benefits secured by crypto-graph; this is from where it took its name. Crypto-currency is not under the control of any specific government and authority and hence can not be manipulated. This virtual currency is known for the portability, transparency, and resistance that it provides to inflation. However, it also comes with a disadvantage which is that its value fluctuates.
Why should you be bothered about it?
For a long time, crypto-currency has been debated because of its benefits while using it as a financial tool. Providing easy access to financial services opens up the gateway for social and economic growth across the globe. You must be pondering why you should adopt the usage of crypto-currency and what potential benefits it can offer you. With more people investing in cryptocurrency, the more benefits of this digital currency for financial growth have been coming to light. Many currency investors attach the crypto-currency in their portfolios because of certain advantages like
- It provides an alternative on which people can rely to protect themselves from the government attempt to maintain a centralized currency and preserve their assets to be controlled by the authorities in times of economic difficulty.
- Cryptocurrency is a safe way to work with transactions and is just like buying gold.
- Another benefit of adopting crypto-currency is eliminating a middle man that benefits the investor to a great extent.
- Crypto-currency does not exist in the form of any physical entity; rather, it exists in a state that doesn’t require renewal, so it is a good store of value. It is also a good asset that provides the dealers with an opportunity to invest.
- Crypto-currency is a decentralized property having no central authority, and hence the risks of scams and frauds vanish away.
- It does not require any middle man or a third party. Hence the dealer is the only authority to manage his currency.
- Cryptocurrency can be managed, bought, and sold from any place globally because of its digital nature. What you only need to own is the wallet. However, the transactions made through the process are irreversible, and one cannot ask to return the currency once it is transacted.
- All the transactions made through the cryptocurrency platform are highly monitored through a computerized blockchain technology system that operates across the globe to protect the currency from any theft and scam. Many investors feel comfortable investing in cryptocurrency because it provides a good store of value with a high-grade security system.
The impact on the global economy
Discussed below are some of the features that describe the impact that crypto-currency has on the current global economy.
- Enhanced economic activities
Crypto-currency has become an institution where all digital currencies are supervised, and the digital coin exchange occurs across the globe. The rate at which the new investors are joining the crypto-currency and the rate at which they are rich and financially stable overnight is confirming that the growth of the digital currency industry is earth-shattering.
Many people and industries are developing and flourishing through the emerging crypto-currency trend, and many people rely on crypto-trading as a source of their income. The way the global economy is shifting and cryptocurrency is providing potentially satisfying solutions are worth admiring.
2. Great Opportunities for Poorly Banked Countries
The countries that come under the sphere of the third population don’t own a strong and basic banking system to help their citizens cope with their financial needs in the time of crisis. There is no specific system of giving loans and checking accounts, and hence their inhabitants are financially unlucky because of the doubtful lending practices.
Moreover, the interest rate for these lending services is also unfair, which increases the instability on the part of the people who ask for a loan. This is where crypto-currency is playing its role by providing high volatility.
A wide majority of the world population own cell phones on which they can hold an account on the digital wallet apps to help people who don’t have any bank account. In addition to this, cryptocurrency is also decentralized and hence allows free transborder trading. The application of technology for financial purposes leaves the users more empowered, connected, and financially stable.
3. Low Transaction Costs
Blockchain technology and cryptocurrency do not need any physical entity to deal in. Moreover, the cost of a transaction is also minimal. The lack of proper organizational structure also doesn’t need the employees to operate it, and no bills to pay for the building. Hence, it contributes to naturally decreasing the transaction fee.
Low transaction fee motivates more and more people to join the cryptocurrency arena. Moreover, some brokers don’t even require any minimum deposit limit to trade with.
4. Increased Transparency of Transactions
As all transactions in the blockchain industry and cryptocurrency are digitized, there exists a complete record in a distributed ledger. Moreover, the record cannot be manipulated by any third party. Hence the risk of fraud diminishes. This provides an opportunity for the inhabitants of under-developed nations to trust the secured transaction system and enter the cryptocurrency arena to boost their social and economic development. People will be able to maintain a track record of their funds.
5. More Power to Entrepreneurs
We live in a time when it is best to invest in a business that is not limited by the transnational border. All thanks to the emergence of cryptocurrency that helps entrepreneurs to deal in multiple currencies. Like BitPesa, a crypto-institution allows the dealer in Europe to make transactions in Africa, Asia, America, etc.
The goal is to help small business owners across the planet get an opportunity for better financial connection and coverage with the rest of the world. By using the digital wallets of different crypto-currencies, entrepreneurs can convert the altcoins into fiat currency at any time for investing and purchasing things.
6. Enhanced security features
Crypto-currency is still new in many countries, and hence people are skeptical about its security features. Blockchain technology stores the information in a public database. However, this information is highly protected by encryption, crypto-graph, and other security features. This makes the transaction process fast and secure.
With the growth in the value and frequency of adopting crypto-currency, people are now getting more awareness about Bitcoin, Litecoin, Ethereum, and other digital currencies, which have simplified our lives through amazing features. However, some people still fear adopting it. But the above discussion would surely have minimized your doubts if you are among them.