The Influence of Cryptocurrency on the World Economy

As you may know, blockchain technology aims to transform the current financial system and exclude the mediators, and these facts can’t be unnoticed by governments. 

In the beginning, cryptocurrency seemed to be a doubtful scheme, and now many financial giants show that blockchain can be successfully used in the bank system. 

And now there is a big question – what is Bitcoin? Is it the money or goods? 

When Satoshi Nakamoto was presenting Bitcoin, his concept was to present it as the virtual currency, but in reality, we see that people don’t measure money and goods in crypto – fiat money is on a roll. And Bitcoin is measured in BTC as well. 

The difference between cryptocurrencies and regular currencies:

  • investing in cryptocurrencies has minimal risk compared to other currencies;
  • electronic currency does not have a definite owner, and ordinary money refers to the political and economic situation of the country;
  • the main element of cryptocurrency is demand;
  • the functions of ordinary money are assigned to digital coins, while the individual characteristics are characteristic only of cryptocurrency.

These features include:

  • payability;
  • storages – top Bitcoin wallets;
  • growth of the monetary unit;
  • commodity exchange.

Many financial experts discuss the reasons why crypto can’t act like dollars, for example. 

The first reason is the complete decentralization – the absence of the institution that regulates and protects the cost of money. 

The next reason is volatility – the high fluctuations of crypto prices prevent them from being used for payments. Although, for example, Microsoft accepts BTC to pay for Xbox content and in the Windows store, even with the volatility. Also, it is known that bitcoin is often used for cross-border payments between counterparties from different countries. For example, in international trade or to pay remote employees.

Cryptocurrencies affect the economic, political, cultural, and social life of humankind. Digital money is not becoming a substitute for real currency, but it can become an impetus for the formation of a new currency system. Currently, in the absence of regulations and guarantees to protect bitcoin buyers, there is a risk of unscrupulous persons appearing on the market.

Previously, governments wanted to prohibit or restrict the use of cryptocurrencies, but now many countries are positively disposed towards the new technology. Electronic money can be transferred anywhere in the world at virtually no cost and can be traded with the help of crypto signals.

Thus, the risk for cryptocurrencies is that the state does not conduct an independent interest rate policy. The world economy will change, and currencies will go into electronic savings. The number of investors is growing every day, and as a result, electronic assets will be valued much more than they are now.

In general, the cryptocurrency market is actively growing, new companies and infrastructure projects appear. And the fact that the legal institutions and software development services are trying to assess the impact of bitcoin and other digital currencies on the development of the economy is a positive signal. This proves once again that cryptocurrencies are a multifaceted concept, and the relationship arising from their use can be interpreted in different ways, and no regulator has yet come to a consensus on this issue.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.