The Impact Of Cryptocurrency On The Global Economy

Cryptocurrencies are virtual currencies that are decentralized and use cryptography to secure transactions. This means that they are not controlled by any government or central authority and are resistant to inflation. However, their exchange rate is highly volatile.

Cryptocurrencies have been a topic of discussion for a while now. They are gaining popularity as a financial asset that is easily accessible and convenient. Digital instruments have the potential to make capital and financial services more accessible, which can contribute to the economic growth of developing countries. Cryptocurrency in Kenya has gained more exposure in recent years as more traders realize the overwhelming advantages of these assets.

Why are cryptocurrencies gaining more popularity?

The traditional financial system can fail if the currency is manipulated, leading to a loss of value and discouraging investors. In times of high inflation, cryptocurrency like Bitcoin can be considered a safe investment. The Covid-19 pandemic caused a significant fall in asset prices, leading to a surge in the popularity of cryptocurrencies as investors searched for alternative assets to protect their wealth and purchasing power.

Investors are betting on cryptocurrency becoming a mainstream asset, with the value of Bitcoin surging eight times since March 2020. The limited supply of cryptocurrencies like Bitcoin has contributed to their increasing popularity among investors who prefer volatility over a one-sided market.

Job Markets

The emergence of cryptocurrency has led to the creation of an entire industry dedicated to overseeing cryptocurrency exchanges globally. Some individuals have become wealthy quickly by adopting cryptocurrency early, while others have established businesses that rely on cryptocurrency trading for their revenue.

The number of employment opportunities in the blockchain industry has increased significantly, from just over 1,000 in 2016 to more than 4,000 in 2017. The demand for software engineers has been the highest among all professions in the cryptocurrency industry. Despite fluctuations in the job market, interest in these professions has remained constant.

Currencies

Trust in U.S. banks has declined since the 1970s. In countries with unstable local currencies, cryptocurrency can provide a way out of the resulting economic hardship. This decentralized practice enables peer-to-peer transactions without government intervention.

Around 1.7 billion people worldwide lack a bank account and face financial difficulties, often resorting to dangerous lending practices. Many of them, however, own mobile phones. With cryptocurrency transactions available through mobile applications, it could become a viable option for them.

Cryptocurrency’s decentralization also provides an advantage by allowing citizens of countries with unstable currencies to trade with citizens of more economically stable countries, promoting a sense of economic fairness.

Transparency

Blockchain technology and cryptocurrency transactions are digitized and automatically tracked on an unchangeable ledger, making them immune to manipulation by individuals, organizations, or governments. This offers significant advantages, including greater power and autonomy for individuals and a reduced risk of fraud and corruption. In particular, these benefits can be especially valuable for people living in underdeveloped countries or those facing government oppression. Cryptocurrencies allow these individuals to participate in the global economy, which can help to boost their own economic prospects and overall well-being.

Challenging the USD

The USD has been the reserve currency of the global economy for many years, but Bitcoin and other cryptocurrencies are now challenging its dominance. Cryptocurrencies are increasingly being used in global transactions, causing the USD to lose ground. For many years, there have been attempts to reduce the USD’s influence and end its reign as the dominant currency, but none have been successful until now. Cryptocurrencies, especially Bitcoin, appear to be driving the process of de-dollarization, which has the potential to transform the global economy.

Crowdfunding

Crowdfunding has become popular for entrepreneurs and small business owners to raise funds for their projects. The emergence of cryptocurrencies and blockchain technology has made the process even simpler. Since 2017, Initial Coin Offerings (ICOs) have become the preferred crowdfunding method. Entrepreneurs no longer need to rely on business angels or venture capitalists to finance their ideas. Instead, they can use ICOs to raise funds from a broader audience, helping to boost their development process.

New Mode of Payment

Our generation has experienced a significant shift in payment methods compared to our parents and grandparents. Instead of relying on physical cash, we have become accustomed to using debit and credit cards. The financial system has seen many innovations over the years, and cryptocurrencies are the latest addition to the payment landscape. In fact, several countries have already started accepting cryptocurrencies as a form of payment. For instance, in Russia, people can use Bitcoin, Litecoin, and other Altcoins to buy plane tickets, pay for taxis, and purchase various other services.

Final Thoughts

Cryptocurrencies are having a significant impact on the global economy, and their popularity is increasing rapidly. They offer advantages such as transparency, decentralization, and the potential to make capital and financial services more accessible. Cryptocurrency has also led to the creation of a new industry that has generated many job opportunities. Furthermore, it provides a viable option for people without bank accounts or those living in countries with unstable currencies. With the potential to challenge the USD’s dominance and transform the global economy, cryptocurrencies are indeed a significant development in the financial landscape.