Bitcoin, Litecoin (LTC), Ethereum (ETH), Dogecoin, Zcash (ZEC) ,Bitcoin Cash(BCH), Ripple (XRP), Monero (XMR); unless you have just landed from the moon,you must have come across these cryptocurrencies online. Cryptocurrency has over the last few years become the most popular topic of discussion on internet forums and the debate has now spilled over to the global financial markets.This virtual or digital money it no longer cloaked in secrecy and the ordinary consumer on the streets can now transact and trade in it like with any other recognized currencies. Now, is cryptocurrency the future of the global economy? If cryptocurrencies are part of your statistics homework, you should stick here and learn the reason the global financial markets can no longer ignore this of neo-currency.
Cryptocurrency in Brief
To appreciate the tremendous impact cryptocurrency has today and in the future economy, it is good to demystify this form of virtual currency. In the simplest definition,cryptocurrency such as Bitcoin and Ethereum (ETH) take the form of tokens/coins. Unlike common currencies regulated by governments,cryptocurrencies rely on encryption techniques for regulation.
Generation of currency, transfer of funds, and verification of transactions all depend on cryptographyto guarantee security. This virtual currency is free from government manipulation and control. With more people using the internet, cryptocurrencies have become popular as a form of exchange because they are fast and secure.
More businesses both online and offline now accept cryptocurrencies and this signifies the start of a revolution in how people make financial transactions. To show the importance of cryptocurrencies,consider there are over 1,500 crypto-assets in circulation and Bitcoin boasts capitalization of $200bn.
Are Cryptocurrencies the Future of the Global Economy?
Since World War II, governments across the world have continued losing the trust of their people. As their appetite for power increases, they demand more control over their subjects. For this reason, consumers feel constrained by taxes and other forms of control.
- Form of Emancipation
The consumer embraces any form of emancipation that emerges and this is one reason for the popularity of the internet which most governments have not managed to control. Cryptocurrencies will become the future of the global economy because the global consumer has come to trust them over the years. For any currency, trust is the most crucial thing and cryptocurrencies have gradually earned this trust making them a crucial aspect in the global economy.
- Safer Financial Transactions
Fraud has become a big issue with the global economy losing billions annually. Business owners across the world would like to have a financial solution that is safe and secure and this is what cryptocurrencies offer. Cryptocurrencies are digital and it is almost impossible to counterfeit or reverse arbitrarily as happens with credit cards. This is one innovative solution to overcome online credit card fraud, identity theft and other forms of fraud.
- Cheaper/Faster Settlements
Usingcryptocurrencies is fast and cheaper as there are no multiple fees to complete a deal. If you want to buy property in Costa Rica, you can do it fast without the need for third parties such as lawyers and notaries. This is what the global market wants. There are no transaction fees and this saves both parties in any transaction a lot of money.
Figure 1: Bitcoin Vs. The dollar. What’s the future of the economy?
- Access to More People
While there are over 4 billion people online, only a small percentage use credit cards.Businesses would do with a more accessible form of payment and this makes cryptocurrencies the future of the economy as everyone with access to the internet can use them to transact.
Other reasons that out cryptocurrencies at the center of the global economy include increasing universal recognition, decentralized control where every user has a say, removing barriers and restrictions to trade, ability to reach a new market and many other benefits. If your accounting homeworkhas a question on the place of cryptocurrency, now you have a head start.