The introduction of the first cryptocurrency, Bitcoin, was done in 2009 by Satoshi Nakamoto in an attempt to create a virtual currency. As it became to come into use, the decentralized and autonomous qualities of the bitcoin attracted investors in its early years after development. By 2010, the cryptocurrency became widely known and currently, its value is taking a sharp uptrend. The ability to revolutionize the entire economic structure of the world has led to the massive growth and development of cryptocurrencies over the years. In today’s society, more people are turning towards the digital transaction through some kind of virtual currency. With the acceptance of bitcoin by the major economies, the future of cryptocurrencies is predicted to be prosperous. There are various impacts of the development of cryptocurrency on the international economy.
AVOIDING THE MIDDLEMAN
In the current international financial transactions, the banks, clearing houses and the technology-SWIFT, plays a vital role as without such entities there is no global transfer of the money. SWIFT facilitates a network of communications between the banking institutions, but it doesn’t transfer money. Although most banks and financial institutions use it, the transfer of information sometimes can take days to complete. However, the cryptocurrencies cause a huge effect on the global payment system as it eliminates the requirement of middlemen. While transferring funds from one nation to another, the general process would involve going to the bank, filling out the form, depositing the money, which would take a massive amount of time. Conversely, cryptocurrency does it immediately, with no hassles.
EMERGENCE OF THE NEW MARKETS
The development of cryptocurrencies has resulted in the evolution of the new market where, unlike the present money market, the crypto market is not managed and directed by the government. The cyberspace will rise up as the managing body that will be responsible for handling and managing the crypto market. In the crypto markets, the transaction cost is nearly zero, which makes it better than the traditional government-backed money.
The dominance of the United States has an important effect on the global economic and political affairs. In terms of the volume, the entire global economy is fueled by the US Dollar. And so, the global economy depends on the US dollar. However, with the emergence of cryptocurrencies, the financial transactions have started getting decentralized and this can create an important effect on the international trade. The cryptocurrency will find the solution for the de-dollarization in the global economic landscape.
SAFE ONLINE TRANSACTION
In a bitcoin transaction, one doesn’t need to post personal information, unlike credit and debit cards which retrieve individual’s personal information like name, address, balance, and bank account details. The personal information shared with the third party can lead to the identity theft. Bitcoin removes the possibility for such cases and can potentially be the future of safe online financial transactions.
HELP IN ECONOMIC GROWTH
The high amount of transparency in the blockchain and the transaction-recording system associated with the cryptocurrency has directly helped countries minimize the tax evasion. The cryptocurrencies are able to withstand the economic turmoil and help in stabilizing the global economy to a great extent. Additionally, the use of bitcoin has helped to reduce & overcome distressed economies. With this, the economic activities related to the trade and other areas are paced up.
The prospect of cryptocurrencies in the future is seen as quite glorious with the multiple advantages it has got. Starting in the year 2017 with less than $1,000, it soon crossed multiple landmarks of $5,000, $10,000 and $15000, making 2017 the most incredible year for bitcoin in its history. With countries like the USA and Canada being open about accepting the cryptocurrency as an alternate form of payments in the future, the cryptocurrency is likely to take over the traditional government-backed currency. With Japan accepting the cryptocurrencies as a legal instrument, it is time for the rest of the world to accept its importance and move towards the virtual currency