Cryptocurrency can have positive as well as negative impacts on the international trade. Whenever a new technology comes out, it proves an ease of doing business for the world, but soon some disadvantages of the same also start blinking. The same happened with the cryptocurrency. At the first instance, it brought many of the advantages for the business and international transaction but later on, it has been reviewed that the same has many negative impacts on cross-border transactions. Firstly, to discuss the positive impact of this virtual currency, this is to be stated that following are some of the benefits that cryptocurrency provides to the world:-
Lower Fee:- Before the development of cryptocurrency there is the very high cost of international transactions, but now as this currency is available to the world in a virtual mode, the transaction fee remains very minimal.. Further, it is a peer to peer review system and therefore no taxes exist there in the transaction done by the payment mode of cryptocurrency.
Secure Payment:- There is a properly regulated payment channel that governs all the outs and in of payment in case of interaction trade. Parties conducting the transaction and making payment via cryptocurrency are required to have money available upfront in order to ignore the chances of payment bouncing issues.
Standard exchange rate:- In an international trade transaction, a person has to deal with eth buyers and suppliers of different countries and this is the reason that there is a problem with the exchange rate. The currency of every nation has different values and a different exchange rate in comparison to the currency of other nation. In such a problematic scenario, cryptocurrency offers a standard rate as it accepted by almost every trader in international transactions. People use the same currency and therefore no issue remains there in respect of exchange rate.
Fast Movement of Money: – It takes hardly 10 minutes for the verification of a payment in the blockchain and hence, money moves very quickly from buyer to seller (Chuen & Linda, 2018).
Proper record keeping: – As mentioned earlier, all the transaction done using this virtual currency as a mode of payment, keeps in the record. These records can be checked and cross-verified by the parties any time in the future.
All the aforesaid are benefits of cryptocurrency. Now moving towards the negative impact of this currency in cases of international trades, this is to states that these are the drawbacks and failures of this currency. The same are discussed as follow:-
Legality of currency: – Some of the cryptocurrencies are not valid and legal in all countries. This creates an issue while transacting with any person from such countries. If a person accepts such currency, it leads an issue of illegal trade transactions.
Uncertainty: – Cryptocurrency is not a physical thing and value of the same remains uncertain. Sometimes, such currencies can be more valuable than a gold coin or the situations can be just adverse and therefore to say that there is uncertainty in the value of the same. In addition to this, people are not fully aware of the concept of crypto currency (Putnik, 2017)
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