Order from us for quality, customized work in due time of your choice.
Introduction
Cryptocurrency refers to a virtual or digital currency protected by cryptoanalysis hence making it impossible to counterfeit or to spend multiple times. In many cases, cryptocurrency is decentralized in technology-centric networks and distributed by separate systems of computer programs. The important note about cryptocurrency is that any authority does not centrally issue it. Hence it is immune to manipulation and government interference (Bartolucci et al. 2). The word cryptocurrency comes from encryption techniques that are applied to protect networks. However, cryptocurrencies have faced criticism for several reasons that are connected (Dahham Dahham and Abdu Ibrahim 2). They have been linked to illegal activities, exchange rate volatility, and the general constraints underlying them. Types of Cryptocurrency include Bitcoin, Ethereum, Peercoin, and others. This paper evaluates the effects of cryptocurrency on the global economy.
The Challenge to the US Dollar
The worlds global business transactions rely on the US dollar (USD). With USD being a reserve currency for the global economy, the introduction of Bitcoin has challenged it (Gandal and Halaburda 4). Due to convenience, cryptocurrency has been frequently used for transactions, and that has seen the USD gain low popularity in international business (Dahham Dahham, and Abdu Ibrahim 8). Due to the increased transaction transparency, companies have opted to diminish the risk of corrupt dealers. The liberty that cryptocurrency cannot be manipulated easily gives more power to the blockchains to boost the economy, hence gaining more share in the competitive face (Bartolucci et al. 8). The developing countries can grow their economies since they can avoid the fluctuations of the USD. Through cryptocurrency, it is easier to develop a framework where citizens can track their financial position in their given countries.
Guarantee of More Entrepreneurial Power
It appears that the current state of affairs allows a more prosperous time to excel in business. The sense of blockchain technology and other forms of cryptocurrency has helped entrepreneurs to receive payments in various ways (Gandal and Halaburda 18). An example is BitPesa which serves the African region to help business owners transact with their American, Asian, and European counterparts. In most cases, BitPesa and Bitcoin aim to enable small and medium enterprises (SMEs) to get fair financial coverage and a liberated connection of resources in the entire world. Using TenXs digital wallet, entrepreneurs can convert alternative coins to normal currencies and aid in redirecting to more investments and payments (Dahham Dahham, and Abdu Ibrahim 4). Due to globalization, the world has transformed into a new model where issues are undertaken uniquely.
The rate at which cryptocurrency has penetrated the market makes the traditional financial firm ready to transform their methodologies in the way they transact (Gandal and Halaburda 14). The important part of this matter is that the world has been longing for a time when borders will be under low restriction in search of liberty in social and financial breakthroughs. The blockchains such as Bitcoins have come with technological ways to effectively address everything (Dahham Dahham, and Abdu Ibrahim 7). It is forecasted that it will take a few years for Cryptocurrency applications to be embraced in the day-to-day transaction hence shaping society for the better (Bartolucci et al. 10). From the foreshadowing, many people will have the freedom and chance to invest across the world with Cryptocurrencies aid.
Reduction of Reliance on Fiat Money
As mentioned in the above analysis, cryptocurrency, more so bitcoin, is free from issues such as politics and economic manipulations. Bitcoin can serve as an alternative way to fiat money transforming the transactional stereotype that has been perceived from the traditional ways.
There are more chances that people will gradually start relying on blockchain systems in undertaking their global transactions (Dahham Dahham, and Abdu Ibrahim 5). Speed is a key convenient factor that most people like where one does not have to incur more time and resources to obtain a certain financial step (Bartolucci et al. 12). It is interesting for people who have dabbled in Bitcoin to perceive that their virtual resources can have the same protection level as fiat money. Using cryptocurrencies is one way to end the traditional authorized cash.
The Use of Cryptocurrency Eliminates Middlemen and Brokers
The new way of transacting using Bitcoin allows investors, entrepreneurs, and business merchants to have electronic transactions between several parties without involving third parties. For example, using Bitcoin does not need any intermediary or a broker as traditional currency does. The third parties are not involved because dealings are authenticated in a decentralized way (Dahham Dahham, and Abdu Ibrahim 7). From that perspective, banking institutions have become anxious since cryptocurrency has few requirements for its services. Additionally, transacting through Cryptocurrencies takes less time than normal ways and discourages the involvement of multiple hands.
More Growth in Economies Due to Global Investments
It has been noted that many investors are now encouraging the addition of cryptocurrencies in their business frameworks. It is more likely since blockchain technology has a chance of improving the portfolio on a positive note (Gandal and Halaburda 21). Countries that have experienced slow growth in their economies have been able to get boosts from Cryptocurrencies inclusion as it motivates business people to get more opportunities from overseas. Reports suggest that a small allocation of cryptocurrency has a significant boost in the collective returns of around 60% and 40% products and services allocation mix while affecting its instability at a lower rate (Dahham Dahham, and Abdu Ibrahim 6). Additionally, some international business researchers have ascertained that the ongoing concern about Cryptocurrency collapse can lead to worldwide financial issues. However, investors have seen Cryptocurrencies as a model that can diminish inflation (Bartolucci et al. 16). Therefore, if the current global business trends are not affected by other key drawbacks, there is the likelihood that global shifts in investments will be common in society.
Conclusion
From the analysis of the global impact of the use of Cryptocurrencies, the major effect has been towards the investment, economic boost, and change in transactional framework. Relying on cryptocurrency can change many aspects of how international business is undertaken. For example, financial institutions have been anxious about the Cryptocurrency applications low engagement since it does not require intermediaries. From the way blockchain chain technology is advancing, it is predicted that fiat money will be abandoned in the future, and the use of a new virtual way to transact replace the older ways.
Additionally, if cryptocurrency elements such as Bitcoin do not get constraints, many transactions will be done online and more securely. Due to innovation by artificial intelligence, the development of more convenient ways to transact will be realized, changing the global economy. Current trends in international business will incorporate the use of Cryptocurrencies in the existing portfolios. Therefore, many developing countries will be boosted by the interaction in global trade to grow their economies since Cryptocurrencies have lesser social, economic, and political barriers. It is recommended that countries adopt the new ways of transacting with caution since there is no guarantee of blockchain integration in virtual transactions.
Works Cited
Bartolucci, Silvia et al. The Butterfly Affect : Impact of Development Practices on Cryptocurrency Prices. EPJ Data Science, vol. 9, no. 1, 2020, pp. 2-18.
Dahham Dahham, Ahmed Zahim, and Abdullahi Abdu Ibrahim. Effects of Volatility and Trend Indicator for Improving Price Prediction of Cryptocurrency . IOP Conference Series: Materials Science and Engineering, vol. 928, no. 1, 2020, pp. 2-9.
Gandal, Neil, and Hanna Halaburda. Can We Predict the Winner in a Market with Network Effects? Competition in Cryptocurrency Market . SSRN Electronic Journal, vol. 2, no. 4, 2016, pp. 4-21.
Order from us for quality, customized work in due time of your choice.