In the last few years, the term cryptocurrency has rapidly gained popularity. Apart from being essential for those who value privacy, cryptocurrency has also taken the world by storm as more and more people buy and invest in them. As compared to traditional currencies, cryptocurrency transactions are usually verified by users' computers. But what is its impact on the economy? Here are some of the ways it's affecting the economy.
It's challenging the dollar standard
If you don't know, the global economy majorly depends on the US Dollar. Since the US Dollar is the reserve currency of the world's economy, every single financial actor all over the world depends on the US market. Because of this, any changes in the US financial markets always affects the world. However, with the emergence of Bitcoin and other cryptocurrencies, the financial transactions are being decentralized. This is expected to greatly change the dynamics of foreign relations, international trade, and diplomacy
Today, more and more people are using cryptocurrencies such as Bitcoin. This is because companies and other legitimate businesses have started embracing them as a way of payment. Investors and online shoppers are increasingly using cryptocurrencies which saw over 1 million wallets being created in 2016. There’s an online casino that accepts bitcoin and has seen an increase in the number of customers using them. The same can be said for any operator in this industry.
It has cut middlemen
The ecosystem of the international financial transfer transactions and the mainstream financial environment normally require entities such as banks, clearing houses, and Swift. This means there is no global transfer of money that can happen without the SWIFT network. Thankfully, with the coming of cryptocurrencies, this is no longer necessary. By cutting out the middlemen, cryptocurrencies are causing a huge impact on the global payment.
The emergence of new markets
Currencies such as Ethereum and Bitcoin have led to new markets which are controlled by no one. This means Cyberspace will rise as the new body that will maintain and handle such markets. The almost zero transaction costs (depending on the stability of the currency) mean that these currencies will become even more popular than the traditional money that people are used to Although this is just the beginning the possibilities that are expected to happen are endless.
It has simplified the crowdfunding process
There is no discussion about cryptocurrencies that can occur without mentioning the Initial Coin Offering (ICO). With the coming of ICOs, developers and entrepreneurs no longer want to waste time trying to convince banks, venture capitalists and angel investors to put up equity in their business. Today, once an idea has been conceptualized, it's, tokenized and then taken to the public. This means there is an increased proliferation of technology-based businesses that would never have been there.
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Cryptocurrencies have seen increased growth in market capitalization, price, and mainstream adoption. This means they are providing functions and features that are changing the way things are being done. It's not only a question as to whether they are affecting the economy but how and what the future hold for them. Although it's easy to scoff at the boom, it's likely that cryptocurrencies will significantly impact the global economy.