What Are the Effects of Bitcoin on the Global Economy?
In the short amount of time that Bitcoin and other cryptocurrencies have entered the world of economy, there have been a lot of rumors about them. Many startups are looking to conduct projects revolving around Blockchain, investors in different fields are thinking about using Bitcoin, and a lot of attention has been attracted to this new technology. But how will the effects of Bitcoin and other cryptocurrencies on the world of economy manifest themselves?
Elimination of Mediums from Different Trades
One of the first applications of Bitcoin and other cryptocurrencies is in eliminating mediums and middlemen. Official and unofficial mediums will not have a place in Bitcoin trades. For example, if there is supposed be an international trade in two regions of the world, there will no longer be a need for the presence of mediums such as financial institutes, banks, etc. in order for the payment and trade to take place. Of course, this application of Bitcoin and other cryptocurrencies has caused a lot of worries for banks, though it should not be forgotten that passing regulation to observe international activities done via Bitcoin and other cryptocurrencies is rather difficult.
Removing Dollar from Its Hegemony in Different Markets
The role that the dollar plays in international trades is very important. With this currency in different markets, the U.S. is able to impose its power and sanctions. But if cryptocurrencies such as Bitcoin are to enter the market, this hegemony will be taken away from U.S. dollar in economic activities and business. With cryptocurrencies, countries can engage in international trades and escape U.S. policies. For example, Venezuela has shown a lot of enthusiasm toward cryptocurrencies such as Bitcoin.
Difficulty in Regulating Cryptocurrency Operations
The nature of Blockchain and cryptocurrency operations is their anonymity. The fact that these systems are decentralized makes them further difficult to regulate. For this reason, many critics do not regard the widespread use of cryptocurrencies as something good. Some critics even talk about the use of criminal groups like terrorists from Blockchain system. Also, it seems that money laundering via cryptocurrencies is another worrying issue.
Increase in International Trades
About two billion people in the world do not have a bank account. In many countries, credit cards are not used for different trades. Now, if the use of Bitcoin and other cryptocurrencies becomes prevalent, many countries that are not that developed and lack proper business and economic facilities will have the chance to connect with the world. With the presence of Bitcoin and other cryptocurrencies, minorities and countries that have not so far been able to cooperate in global markets will get a proper chance of doing so. One of the manifestations of this advantage is the possibility of sending money by immigrants to their families in their home countries, immigrants that cannot benefit from the international financial payment systems.
As it was mentioned, cryptocurrencies are not all advantage. However, there are complexities in the mechanism of using them. The opportunities and threats of this new technology can end in favor of all the people in a smart compromise.