6 Ways How Bitcoin is Reshaping the Global Economy

One of the key inventions of the digital age is the cryptocurrency. Bitcoin was the first cryptocurrency, and continues to be the world’s leading digital currency. Still a relatively new concept for investors in the market, BTC is gradually gaining the confidence of investors, as a greater number of individual investors and firms are beginning to invest millions of their fortunes in bitcoins. This increasing investment has both, short term and long term implications on the global economy.

Bitcoin transaction

Here are 6 different ways we think Bitcoin is reshaping the global economy:

1. Changing Global Investment Preferences

The investors throughout the world have started adding bitcoins in their investment portfolios as well. This is because the inclusion of bitcoins increases the chances of improved portfolio returns and upside for the investors, while minimally impacting the asset volatility of the portfolio and greatly increasing profits on returns.

However, according to some analysts, the world might witness a crash in bitcoin prices in the near future, causing a financial crisis on a global scale.

2. Providing an Alternative to Fiat

Bitcoins offer users a trading/exchange platform other than the usual fiat currency. This allows the users to take part in the global markets without going through the hassles associated with the fiat currencies, such as the taxations.

The use of bitcoins can adversely affect the fiat circulation. However, there’s nothing any regulatory authority can do about it, given the decentralized nature of the bitcoin network. Although bitcoin was initially used as an investment tool, a greater number of marketplaces have begun to offer the choice of paying with bitcoins. Another alternative to Fiat is the Bitcoin system platform where you can easily trade or exchange bitcoins safely.

3. Bypassing the Middleman

The basic concept of bitcoin, as revealed by its creator, Satoshi Nakamoto, is to facilitate peer-to-peer transactions between two parties, without the involvement of any form of third party. This decentralized system of payments excludes the need of any intermediary party, causing distress among financial institutions such as the banks, as this system bypasses them, thus making the payments faster and free of any processing costs.

4. Making Overseas Transactions Easier

Bitcoins also make it easier for people from relatively weaker economies to conduct online transactions, even if they do not own a bank account in their name.

Bitcoins allow people from all economic geographical backgrounds to connect and trade with different people from all around the world. Digital wallets enable the users to conduct online transactions using their bitcoins from anywhere in the world.

According to the market data on blockchain charts, there were approximately 0.3 million 287,492 bitcoin transactions around the world, in the last 3 months. This shows an increasing trend in bitcoin transactions around the world. These online transactions are completely secure, fast and also efficient, as minimal processing costs are involved in bitcoin payments.

5. Extending the Horizon for Crowdfunding

Bitcoins have also opened new avenues for crowdsourcing. The Initial Coin Offerings (ICO) have become one of the most widely accepted methods of crowdfunding for firms. This new technique of ICO allows companies to increase their capital in the shape of cryptocurrency.

Similar to the concept of the stock market, in ICO crowdfunding, the investors buy shares in a venture by purchasing the cryptocurrency coins in the relative proportion. This concept of crypto-equity crowdfunding, similar to the stocks, can cause the shares to increase in value, as the performance of the company improves.

This form of crowdfunding is vital in aiding innovators, creators and entrepreneurs. Also, it has the potential of creating and maintaining a sustainable economy.

6. Revolutionizing the International Remittance Industry

The overseas remittance is a very key component of a country’s economic growth. It allows people to work overseas and send their families their earnings, in order to make a living. It also increases the monetary inflow in the country, assisting the economy.

Currently, these flows of international payments go through middle parties such as the money exchanges and transfer services and the banks, which charge large sums of processing fees. The whole process of money transfer using fiat currencies is also slower and involves several hassles. The bitcoin, however, completely bypasses any intermediary party in cryptocurrency transfer, making the transaction quicker and efficient, as compared to the fiat.

The instant transfer of bitcoins, without the intervention of an intermediary makes it faster, cheaper and securer than many other forms of money transfers. Therefore, several providers have begun the service of foreign remittances, such as BitPesa and Ribbit etcetera.

Final Word

Although bitcoin has existed in the world for almost 12 years now, it has just begun to catch the attention of the world. Bitcoin has been the forerunning cryptocurrency in the world ever since its inception, and has been the top performing cryptocurrency during this year.

However, there are obviously several cons associated with the bitcoins as well such as the immense amount of energy consumed throughout the year for the operations of this digital currency and its price volatility.

Due to the presence of these cons as well, bitcoin will require a lot more time to become a commonly accepted universal phenomenon. Nonetheless, the ways bitcoin has been impacting and reshaping the global economy is pretty evident.