This topic is intended for those beginner in crypto like me. What is a cryptocurrency and how does it work? Does it affect the global economy in any ways? How does cryptocurrency affecting you now? Your financial stability perhaps?
Cryptocurrency is a form of payment that can be exchange online for goods and services. Many companies have issued their own currencies, often called tokens and these can be traded specifically for the good or services that the company provides. Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology spreading across many computers that manages and records transactions. Part of the appeal of this technology is its security.
Cryptocurrencies have been the most valuable assets for those who are active in the crypto market from an early stage. More and more people are entering the crypto world after the pandemic (like me). They get to know about different applications of Cryptocurrencies and how useful it is for international payments and for the economy.
IMPACT OF CRYPTOCURRENCIES ON GLOBAL ECONOMY
Investors Turning Towards Crypto. Initially, traditional investors were skeptical about Cryptocurrencies. Later on, they build confidence as some popular virtual currencies have performed very well. Moreover, some investors are adding more than 3-4% of Cryptocurrencies tto their portfolio, specially Bitcoin.
Eliminates the Middleman. Cryptocurrencies work in peer-to-peer distributed network that eliminates the middleman which are those bank or central body. You can directly send or receive money from a user over the network. It gives you more control over your wealth.
Low Cost and Fast Transaction. Unlike traditional transactions, cryptocurrencies do not involve any bank or central body to verify the transactions. That is why the time and fees of crypto transactions are less as compared to traditional transactions. Crypto miners verify crypto transactions and they are not the central authority. Everyone can become crypto miners and become a part of the network.
New Way of Crowdfunding. Are you familiar in Initial Coins Offering? In financial markets, companies offer their stocks through initial public Offerings to collect funds. Similarly, a startup can offer their crypto coins for Crowdfunding. Since there are no intermediaries, ICOs are great for Crowdfunding. However, you need to be careful hence money launderers use ICO as a way too steal money from people. You must first check the legitimacy of the team behind the ICO.
Great for the Remittance Industry. As the number of immigrant worker rises, cryptocurrencies are great for remittance industry. While the current financial system lacks transparency, cryptocurrencies provide a transparent and low-cost payment platform through which they can send money at a lower cost, fast transaction and less hassle. Many immigrant workers prefer crypto over foreign exchanges for sending money to their families.
Some people fear the changes, but changes are not always bad. Cryptocurrencies are modifying our lives and the way industries progress. It provides features and tools that simplyfies our lives. It is changing the way things work. There is no doubt that it's affecting the global economy in many ways.