Cryptocurrency is a digital currency that uses encryption techniques to control the generation of currency units and verify the transfer of funds. It operates independently from the central bank.
With the arrival of cryptocurrency, the global economy began to change its course. As a result, the popularity of these coins has increased by leaps and bounds in the last few years. Also, these virtual currencies operate on decentralized systems and hence nobody can track any transactions made using these coins.
Cryptocurrency and bitcoins have the potential to change the course of the entire global economy. Today, crypto trading is possible even through your android mobile phone. If you are looking for one such app through which you can trade in cryptocurrencies, check out tunnel2tech.com.
The future of this novel technology has long been debated about and discussed. However, it is no hidden fact that it has emerged as a major financial tool and will continue to grow in the future. This technology has the potential to enhance and improve economic and social growth throughout the world. The best part is that both the developed and developing nations can benefit from this emerging technology. In this article, we will discuss how cryptocurrencies, especially bitcoin, have affected the global economy.
1. Increase In Global Economic Activities
Although cryptocurrencies are of recent origin, there is an industry built around them held by institutions responsible for supervising the digital coin transactions taking place across the world. The cryptocurrency industry is growing at a jaw-dropping rate.
Countless people have become rich overnight because of this virtual money. Bitcoin, the most popular cryptocurrency, has permitted many individuals and companies to flourish and grow. Some people also rely on cryptocurrencies as their only source of income. These coins are highly volatile and the first cryptocurrency that was bought for a few dollars is now worth a million dollars.
2. Advantageous To Countries With The Poor Banking System
Most of the underdeveloped countries still have inadequate and inefficient banking systems. A good banking system should be efficient to be relied on in case of financial emergencies, that is, it should allow people to take loans. However, in some poorly banked countries, people resort to non-banking sources for finance.
The interest rates that these lenders charge are very high and beyond fair. This leads to instability among borrowers, so people turn to cryptocurrency, which is very easy to use. There are many programs and apps that have been made to facilitate the usage of cryptocurrency as well as to attract more audiences. The use of cryptocurrency would lead to a financial revolution which would prove to be highly advantageous to underdeveloped countries.
3. Cheap Transaction Cost
Since cryptocurrency is virtual money, the transactional cost associated with them is minimal. Moreover, unlike the traditional monetary system, there is no need for employee wages, payment of rent, or utility bills in the case of cryptocurrency. All of this results in a low transaction cost, which in turn, encourages more and more people to trust these new tools. When a large number of people invest in these coins, the global economy will definitely thrive.
4. International Trade
Trade at every level is centered on trust and uncertainty. Corporations, banks as well as governments are a product of uncertainty. The centralized institutions that have been in operation for several decades now have become a grease that is keeping the economic wheel turning. But these institutions have become too powerful. With the help of the novel blockchain technology, the world is now observing a new way to reduce the uncertainty in transactions.
Cryptocurrency has shown the world a new way to carry out transactions at a lower cost. Transactions in the healthcare industry, automobile industry, real estate, and so on can easily be automated using these coins.
5. Distribution Of Wealth
Never has the world witnessed growth as it has since the advent of the cryptocurrency industry. In 2017, ether and bitcoin, both very popular cryptocurrencies, have witnessed a staggering growth of 3000 and 2000 percent, respectively.
This is the reason more and more people are considering investing in the cryptocurrency industry daily. The cryptocurrency industry is changing the manner of creation as well as distribution of wealth. An equal level of the field has been created where everybody gets an equal opportunity.
6. Transparency In Transaction
Cryptocurrency and blockchain transactions are digitized and automated. All of these are tracked in a distributed ledger. It cannot be manipulated either by individuals or even companies, thereby reducing the risk of corruption and fraud to a great extent.
This gives developing economies a chance to boost their economy as well as their social prospects. With these coins, people would be able to keep track of the funds of the state, and thus they will have a say in the political matters of their country.
7. Enhance The Power Of The Entrepreneurs
There has never been a better time for entrepreneurs than it is today in the world of cryptocurrency. Blockchain technology, as well as cryptocurrency, can help entrepreneurs to receive payments from many countries.
For instance, BitPesa helps the business owners of Africa to make transactions with Asian, European, and American companies. The main objective is to help small and medium enterprises get financial coverage and financial connection with other countries.
With the help of using digital wallets by tenX and BitPesa, entrepreneurs can convert some or all coins into Fiat money very quickly, which they can redirect to purchases, investment, and payments,
Many people take cryptocurrency as a threat to traditional money. However, this is not true. Blockchain technology and cryptocurrency will take a long time before they completely out rule the existing global financial system.
It is also not right to think that blockchain technology would solve major world problems. Cryptocurrency technology is very young, and it needs more research before it can reach its full potential. However, we cannot overlook the fact that technology has impacted the financial market greatly, especially in recent years.