How Does Cryptocurrency Affect the Global Economy?
Since the dawn of cryptocurrencies, our view of money has changed. Only computer scientists could imagine the digital money that would need no intermediary to be controlled. Only digital rebels tried to create such currency. In 2009, Bitcoin was born, and it resulted in the birth of many other cryptocurrencies that are now a big part of the global economy.
Before the Bitcoin, there were many other attempts to create a cryptocurrency. All of them failed. The reason for the failure was the double spending problem. Bitcoin is a truly sensational currency because it solves the double spending problem with the concept of mining and the blockchain.
Practically everyone knows what mining is. Mining is the process of transaction confirmation. Mining is also the process that makes more bitcoin. And the miners are the network users. So, what is blockchain? The blockchain is a decentralized ledger. For bitcoin, it’s a safe book where miners keep the information about the transactions. It’s that simple. But the blockchain itself is a very complex phenomenon and can be used in many different fields.
Think about it. 10 years ago, we didn’t know what Bitcoin or a cryptocurrency was. We didn’t have a concept of mining and miners, and we definitely couldn’t imagine that we’d be implementing the blockchain in numerous fields. Of course, the cryptocurrencies are affecting the global economy, in many different ways.
- Challenging the USD As we all know, the global economy depends on the USD. It’s a reserve currency of the global economy. With Bitcoin on the road, USD is up to a big challenge. Cryptocurrencies hold the high ground with most of the transactions, and the US dollar is losing in this battle. Through the years, there have been several attempts to de-dollarize the global economy. Countries and governments wanted to end the reign of the USD. Every attempt ended in failure until the Bitcoin was born. Cryptocurrencies seem to manage the de-dollarization process, thus, changing the global economy.
- No use for the middlemen Why is the Bitcoin so attractive? It doesn’t need a middleman to control the flow of the currency. Middlemen are, for example, banks, small financial companies and so on. To transfer a USD from one place to another, you will need a middleman. It takes a lot of time to go through all steps of the transaction. With Bitcoin, there’s no need for a middleman and even international transactions can be made within seconds.
In the Bitcoin economy, the network users are the middleman.
- A new era of Crowdfunding Crowdfunding is an amazing way of gathering money. Crowdfunding has been popular amongst entrepreneurs and people who want to start their small business. It’s a way to boost their development process. With cryptocurrencies and blockchain technologies, the crowdfunding process has been simplified. ICOs are the leading crowdfunding tools since 2017. ICO stands for Initial Coin Offering. Nowadays, entrepreneurs don’t need business angels and venture capitalists to fund their projects.
- ETFs ETF stands for an exchange-traded fund. ETF is a new aim for cryptocurrencies, especially for Bitcoin. There have been several attempts to create a Bitcoin ETF. All of them have been denied by the U.S. Securities and Exchange Commission (SEC). Some experts say that Bitcoin ETF will lead to the more controlled pricing of bitcoin. People point out that Bitcoin ETFs will be a new era for newbie and inexperienced investors. Some experts solely don’t want Bitcoin ETFs to happen. But no matter what they think or say, Bitcoin ETF has a place for itself in the future.
- New payment methods We are the generation that was introduced to a new way of payment. While our parents and grandparents were used to paying with cash (physical money), nowadays, we can’t live without our debit or credit cards. Innovations in the financial system is not a new thing for us. Cryptocurrencies are bringing a new payment method. They are already implemented in several countries. People in Russia can buy plane tickets, can pay in taxis and purchase thousands of other services with Bitcoin, Litecoin and other Altcoins.
Cryptocurrencies continue to grow in price and size. Knowledge about Bitcoin, Litecoin, Ethereum, and others has spread through the entire world. Cryptocurrencies are providing such features and tools that simplify our lives. They are changing the way things work.
Some people fear the changes. But changes are not always bad. Cryptocurrencies are modifying our lives, and the way industries develop. There’s no doubt that cryptocurrencies are disrupting and affecting the global economy in many ways.