How Bitcoin is Changing the Global Economy
Barbara McKinney — December 31, 2017 — December 31, 2017
The term “bitcoin” is being thrown around so much that almost everyone has an idea of what it’s all about. Since it was first introduced in 2008 by the pseudonymous Satoshi Nakamoto, Bitcoin has steadily worked its way towards dominating every aspect of the online community. From buying phone credits to shopping for clothes online, there is no financial transaction that the cryptocurrency is not good for. This alone has contributed to the popularity of bitcoin as a monetary system that continues to go unregulated.
In recent weeks, Bitcoin has experienced a surge in value as more and more people are cashing in to mine their own digital currencies. As of November 2017, bitcoin has at least grown to a whopping $ 11,000 in value spurned on by investments from people who are basically interested in gaining quick cash.
Though it fell back slightly, financial and economic experts are expecting the cryptocurrency to remain robust and will eventually create a lasting and significant impact on the global economy.
For B2B managers and execs, bitcoin may seem like an attractive financial item to invest in. Still, it pays to know how it will shape whole economies and markets in the future.
Reduced reliance on fiat money
Ever since mankind invented currency, money in its metallic and paper forms have become the main medium of exchange. With the digital revolution we are experiencing right now, the economic landscape will transform in drastic ways. But it remains to be seen how bitcoin, which takes the form of data, can replace our present monetary system. Yet, consumers have become more reliant on online transactions as a more convenient means to pay for products and services. What’s more, a lot of people that are already managing their own bitcoin wallets have full confidence that their virtual cash enjoys the same level of security as real money.
Access to a credit system
Being an unregulated currency that is based solely on data, bitcoin enables unbridled access to a secure credit system. Considering that it is stable (for now, at least), it will continue to bridge people who are isolated with global merchants. This will certainly open up new markets and opportunities that will further influence economic growth. In addition to that, bitcoin does not have to require exorbitant transaction fees and withholding taxes, which is what makes it so attractive in the first place.
Regulation of cryptocurrencies
Seeing how bitcoin and digital transactions have become prevalent in recent years, central banks have begun flexing their muscles to put this ad hoc financial system under control. This will eventually lead to legislation addressing the rise of cryptocurrencies and speculations on the financial bubbles that they will potentially cause. Certain measures such as regulating the currency supply and implementing a tax system are being considered to stymie bitcoin’s growth. To oversee the implementation of these measures, certain institutions will have to be put up. Eventually, these will not operate short of politics.
Impact on overseas remittances
For economies that depend heavily on its overseas workforce, remittances are what drives growth.At present, money transfers are facilitated by banks that charge extra in processing and transaction fees. Aside from that, transaction time is relatively slow and it would take seven days at the latest before the receiving party can access the funds. With bitcoin, on the other hand, people can get around these caveats and get more from their money than what traditional wire transfers entail. What’s more, currency conversions through such transfers are costly, whereas bitcoin conversions are much simpler and do not entail any such costs whatsoever. From this, we can only expect overseas workers to depend heavily on bitcoin as a more convenient and less costly means to send money to their loved ones.
Environmentalism and the economy
Bitcoin is mined through a complex software and hardware infrastructure system. And just like any other traditional method of mining, manufacturing bitcoin also impact the environment in not so subtle ways. The servers used for mining consume a great deal of energy. We can only imagine how much is being spent on running countless servers around the world. In response, environmental legislation will have to be introduced to address energy consumption related to bitcoin mining.
References: https://news.nationalgeographic.com, https://www.theguardian.com
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