How Does Cryptocurrency Change The Global Economy?
The spread of “digital coins” has caused a lot of negative feedback from all the leading experts. But today, the spread of digital money does not surprise anyone. The influence of cryptocurrency continues to grow due to the appreciation of various currencies. The number of currency users will soon reach 10 million people, and the cumulative cost is 50+ billion dollars. With such a market value, the impact on the world economy of cryptocurrency is growing due to growing electronic assets throughout the world. The main countries producing cryptocurrency are powerful economic powers, like China and USA.
Today, we can know for sure that cryptocurrencies have an excellent and promising future. Not so long ago, the vice president of Uzbekistan said that digital money is a great opportunity to stop wars / fraud and other manifestations of human aggression. Representatives of other countries supported this statement.
Three years ago, one of the Canadian banks published a report, according to which, the consequences of the spread of “digital coins” were equated to a new gold standard. Digital coins have many analogs with gold.
First, it is limited assets. For example, experts believe that the amount of Bitcoin will not exceed 21 million coins. Secondly, this is the process of mining coins. People spend large resources on “extracting” some product that has no physical value. Value will appear only when people start using this product as a means of payment and savings.
According to Businessweek, international money transfers are the area with the greatest potential for bitcoins in the world. Now, these payments are processed by several intermediaries, including banks with their services, and currency exchanges.
What benefits does a cryptocurrency give to an ordinary person?
At the heart of the creation of cryptocurrency is the idea of a universal accounting register, which is open to the public and controlled by special computers. Blockchain technology blockchain, we no longer need to contact intermediaries. This technology also provides full transparency and security.
So far, most of the middle class are not able to understand how cryptocurrency can improve their lives. Most of them say “Cryptocurrency? What is it? I do not think that it can solve my problems.” If you take into account only 2-3.5% of the savings that bitcoin gives in a credit card transaction, then the “digital revolution” has no effect. But if we calculate how much money goes to banks and other intermediaries from the total amount of world production, then we will get billions of dollars. When you receive a salary or make a purchase, you always give some part of the income to financial intermediaries. Digital coins make it possible to avoid these payments and have excellent savings.
But this influence of crypto coins only on an ordinary person. What impact can it have on the global economy politics?
The popularity and distribution of a new type of money will always put pressure on the economic system of the whole world and individual states where digital coins are allowed. Thus, the experts concluded that the question of the impact of the new currency on the world economy will always be relevant.
Such an institution supports the liquidity of the banking system through refinancing operations, which allows the use of temporarily free funds.
The impact of cryptocurrency on the economy is considered in the following areas:
1) Reducing the value of “traditional” money.
2) Changes in monetary systems.
3) Oppression of official national currencies.
Most countries refuse to accept digital currencies. As a rule, the number of cryptocurrencies in circulation does not exceed 0.028% on the scale of one state. Of course, one cannot exclude the possibility of a substantial increase in this indicator over the next 5-10 years.
Trading in the virtual space due to cryptocurrency inevitably affects the reduction of demand for real money, which leads to a change in the economy. The widespread use of new-generation currency will reduce the demand for “traditional” coins and bills. In addition, the replacement of money with cryptocurrencies significantly complicates the assessment of monetary aggregates.
Now, we can say that the volume of use of digital coins is not very large in the total volume. But if we consider this factor within one country (with a h3 economy, of course), then we will get higher data. In this case, “virtual” money can affect the economic system of this country.
Big ambitions or failure?
Despite the above prospects associated with the spread of cryptocurrency, this technology still has several errors shortcomings. Thus, the Bitcoin system encourages computer owners to keep an accounting log of operations and compels them to compete for new coins that are issued regularly.
Therefore, experts have concerns that some users may have too many such coins and dictate terms to other members of the network.
In the next few years, the cryptocurrency will not be centralized, but the situation may change at any time. Now, this system in all major areas of our lives. Bitcoin is available in sales, education and entertainment. Some online casinos, including Leo Vegas, offer to bet and receive winnings in Bitcoin.
Meanwhile, experts believe that the further development of “digital gold” will provoke a global crisis, as it will deprive political authorities of the ability to manage money. On the other hand, virtual currency can be a technological breakthrough. As we know, any breakthrough in the field of high technology leads to an increase in the efficiency of the economy. But it also leads to different changes. Such periods are characterized by political upheavals, disputes and even panic, especially in the field of cryptocurrency, since not all people know what it is and how it works.