How Bitcoin Transforms Global Economy
The story of Bitcoin is indeed just getting started, but it’s already transforming the global economy. In this matter, it becomes crucial to know how it will shape the global economy and market in the coming years. Here are some visible impacts of Bitcoin on the worldwide economy.
#1. Shifts in Global Investments
Many investors are now adding cryptocurrencies, particularly Bitcoin, into their portfolios. This is most likely because bitcoin allocation higher their chances to improve portfolio upside.
VanEck reports that: “a small allocation to bitcoin significantly boosts the cumulative return of a 60% equity and 40% bonds portfolio allocation mix while only minimally impacting its volatility.”
On the other hand, some experts are having an ongoing-concern about the Bitcoin collapse that can spark a global financial crisis. But, at the end of the day, investors see cryptocurrencies as a hedge against inflation.
#2. Separates Transactions from the Dollar
Cryptocurrencies do not require any connection to the U.S. dollar. The involved parties of a financial transaction are given another avenue to participate in the global economy while, at the same time, circumventing U.S. economic policies.
Even though it might seem like a threat to the government because the U.S. dollars act as the reserve currency for the global economy (which is the primary source of US’ global power), it enables more international transactions.
#3. Eliminates the Need for Middlemen
Bitcoin as a whole is inherently designed to allow peer-to-peer electronic transactions between counterparties without the intervention of any third party. It does not require an intermediary, or a go-between, unlike the traditional currency. Transactions are validated in a decentralized fashion.
This fact has made banking institutions anxious, as it eliminates the need for their service. What’s more, transacting through cryptocurrencies is much quicker as it doesn’t have to pass through multiple hands.
#4. Encourages More Overseas Transactions
Since lots of people living in countries around the world with weak economies still don’t have a bank account, Bitcoin comes in handy to engage them with the global internet economy.
That way, people who live in typically less developed countries have a chance to connect with the internet economy. All that is needed is a digital wallet to make transactions anywhere in the world.
In the last three months of 2020, each day saw an average 287,492 confirmed Bitcoin transactions worldwide.
The transaction it’s quite fast, transparent, confidential, and secure. Also, the transaction fees may be much more affordable than in conventional payment systems (credit or debit cards).
#5. Reduces High Reliance on Fiat Money
As a decentralized currency, Bitcoin is free from any economic and political issues that often can affect traditional currencies. That’s where Bitcoin is designed to be a digital currency that can be an alternative for authorized or fiat money.
Today, customers have become more reliant on digital transfer (as it’s convenient in the sense of transaction speed) as a handy means to pay for products and services. Using Bitcoin as a payment method can reduce the reliance on traditional or authorized money.
What is more interesting is that the people who have already dabbled in Bitcoin believe that their virtual cash enjoys the same level of security as authorized money.
#6. Regulation of Bitcoin
Now that Bitcoin has become ubiquitous, both national and regional authorities prompt to grapple with their financial regulations. In this matter, central banks are working hard to put this ad hoc financial system under control. It can lead to laws specifically addressing this cryptocurrency and speculative bubble that Bitcoin will potentially cause.
Different countries have different approaches to cryptocurrency, some of them (Algeria, Bolivia, Morocco, Nepal, Pakistan, and Vietnam) ban any or all activities involving Bitcoin.
In contrast, some others use it as a means of payment. For example, in the U.S.A, Canada, Australia, the European Union accepts cryptocurrencies, including Bitcoin, as a means of payment even by government agencies.
#7. Removes Barriers to Entry and Emerges New Market
Bitcoin established a global decentralized transaction network that eliminates the necessity of any centralized institutions for currency issuance and settlement. In this case, it has opened the door for a new kind of market and opportunities where no authority or individual controls the money market.
So, rather than persuade the venture capitalists, banks, and other financial institutions for their prospective project, they can bypass the regulations and authority through Initial Coin Offerings (ICO). With ICO, startups and small businesses around the world can sell some of their coins to get their business off the ground.
#8. Opens Access to a Credit System
Bitcoin enables unbridled access to a reliable credit system since it’s a type of unregulated digital currency that’s based wholly on data. If the price remains stable for an extended period, it’ll be able to bridge people who are isolated from global merchants continuously.
Thus, it will open new markets as well as new opportunities that can contribute to sustainable and inclusive growth in the global economy. What’s more interesting is that Bitcoin does not require any pricey fees for transactions, which makes it much more appealing for its users– and people who are considering using it.
#9. Starts New Era of Crowdfunding
Talking about Bitcoin and cryptocurrencies isn’t complete without mentioning ICOs. In 2017, it was the talk of the technology town as it has become the leading crowdfunding method for blockchain-based startups. This new method of crowdfunding allows companies or organizations to raise capital in the form of cryptocurrencies.
CB Insights reports that over 5x more capital deployed in ICOs compared to the equity financings to blockchain startups in 2017. At the end of 2017, the number jumped to a whopping 7x.
What happens in ICO crowdfunding is that the investors buy cryptocurrency coins that represent shares in the project, just like how the stock market works. Hence, the shares have the potential to increase in worth if the company does well. It’s referred to as crypto equity crowdfunding.
This new era of crowdfunding is crucial in helping inventors, entrepreneurs, and creators improve the world, including creating a sustainable economy.
#10. Changes on the International Remittances Industry
Overseas remittance drives economic growth in emerging economies. That way, many people around the world work overseas and regularly send money to their families and loved ones in their home country.
At present, this money has to be managed by intermediaries, including banks or other money transfer services that charge high costs for transaction fees. Also, the transaction process is so slow and takes several days before the receiving party can access the funds. In this matter, Bitcoin comes as a game-changer.
Bitcoin can instantly be transferred across the globe securely. It makes the overseas remittance process a lot easier, cheaper, and more secure. Today, at least 11 Bitcoin providers have already started foreign remittance services, including Ribbit, BitPesa, and Abra.
Source: https://blockgeeks.com/the-impact-of-bitcoin-on-the-global-economy/
Thank you @stella for this article... There may be more option but i have choose working with Bitcoin first.. I wanna know more. Keep writing.