Cryptocurrencies have become one of the most discussed topics due to their uniqueness and decentralization. In a world of innovation and rapidly changing environment cryptocurrencies occupy an important place in the public space and attract the attention of investors.
Cryptocurrency is a form of digital currency. It uses encryption to verify transactions. Encryption aims to provide security and safety. Cryptocurrencies have features that distinguish them from traditional fiat currency and attract the attention of investors with an ongoing interest they are impacting the global economy.
Why do people use cryptocurrency?
- Fast payment.
- A decentralized way for making payments.
- More secure than regular transactions.
- Lower processing cost.
Cryptocurrencies and their Impact on the Global Economy
Cryptocurrencies have had a tremendous impact on the world economy and this impact has both positive and negative aspects.
Positive Impact :
Change the money transfer process
Bank-to-bank transfers take longer time especially if the transfer is international. The transfer of cryptocurrency doesn’t require all of the same processes that a bank requires. Whether a national or international transfer, Crypto transfers are instant, do not require any fees, and can be securely stored in the blockchain. Through this cross-border payments can be easily made.
Give people control over their money
Many people are cautious of banks and financial institutions keeping all of their cash at home is not at all a good option. Crypto is not subject to the rules and regulations imposed by the banks. Anytime, people can get control over their money.
Make money transfers and transactions process safer
In addition to reducing fraud when transferring money internationally, cryptocurrency makes transactions safer. When traveling to other countries carrying cash and cards can be dangerous not only it reduces the danger of carrying cash, but it also eliminates transaction fees.
Offer a stable alternative to unstable currencies
The instability that some countries’ currencies have experienced is shocking. Crypto can provide more stability to those living in economically volatile countries.
It is a decentralized form of transaction it does not require any central authority for making transactions. People enjoy more financial independence.
Negative Impact :
Prices of cryptocurrencies are very volatile, their value can change in a short amount of time. This can make it challenging for everyone to accept them as payment.
Lack of proper regulation
Due to the lack of proper regulation, there are risks and uncertainties in crypto world. They are not monitored by the government or any central authority, making them vulnerable to fraud.
Impacting the environment
Since it uses a proof of work protocol, Bitcoin is one of the most intensive cryptocurrencies it uses a lot of energy that is impacting the environment.
How Governments of different economies have reacted
Different countries have different regulatory bodies. Some are similar while others are different Since the existence of cryptocurrency governments and regulators are still working out to govern its uses. Many countries are progressing while others are working on it. Countries like El Salvador make Bitcoin legal tender, which allows Bitcoin to be used as a means of payment in the country. While In Mexico, crypto-assets are not legal tender and are not considered currencies. Many other countries are either developing or thinking of creating their own digital currencies called Central bank digital currency (CBDC).
Cryptocurrency has been making a huge impact all over the world even it has the potential to take over the world. The possibilities of cryptocurrencies are endless. It allows consumers access to a global payment system – anywhere, anytime in which participation is restricted only by access to technology rather than having any bank account or credit history. It is changing the future of money by providing greater financial inclusivity but it has a negative side too which we cannot neglect as it is not controlled or monitored by aunty central authority there is a chance of fraud as well as it is impacting the environment as it uses a lot of power and energy in mining process and their volatility for example Bitcoin the price of bitcoin changes frequently which may be challenging for everyone to accept them as a payment.