Cryptocurrency has become mainstream since its launch in 2009. Although it has not been fully adopted worldwide, it has had huge success.
Many nations of the world have issued orders against the use of cryptocurrency due to its price fluctuations and several other issues. Some financial experts have labeled cryptocurrency as the future currency to replace the old fiat currency. Bitcoin was created due to this reason.
Can cryptocurrency have an impact on the economy of a nation with its recent adoption? El Salvador and the Central African Republic have both made bitcoin its legal tender. What impact will this have on the economy is a question to answer.
In this post, we’ll see if cryptocurrency can influence the economy and how this can be made possible. For the sake of beginners, let’s see learn about cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is any form of currency that exists digitally or virtually. As a result of this, it cannot be held like the traditional fiat currency. As a digital payment system, its transactions are secured by cryptography.
Cryptocurrency is decentralized meaning there’s no central issuing or regulatory authority. They are run on a public ledger called Blockchain. It is a record of all transactions updated and held by its holders.
The first cryptocurrency created was Bitcoin, which was founded in 2009 by a person or group with the pseudonym, Satoshi Nakamoto.
Bitcoin which trades by the symbol BTC remains the biggest and most popular cryptocurrency. There are over 20,000 other cryptocurrencies created after bitcoin which are referred to as “Altcoins“. Some of these altcoins include Ethereum, Solana, Algorand, Dogecoin, Litecoin, Cardano, Elrond, and so on.
What Economic Impact Does Cryptocurrency Have So Far?
The cryptocurrency was created in 2009 as a solution to the financial crisis of 2008. Today, there are over twenty thousand cryptocurrencies with a total market cap of over 1 trillion dollars before its recent market downturn. These cryptocurrencies are owned by people all over the world for payment, stores of value, and other uses.
Businesses in several industries are benefiting from the blockchain where cryptocurrency is being run. It has had a big impact on financial institutions’ cross-border transactions. The government is not left out as they can use blockchain to keep their records in check. The use of blockchain expands to several other industries which include health, agriculture, and others.
Cryptocurrency has led to the creation of a new industry which is the job market. Many have developed companies that deal with the trading of cryptocurrency such as Prestmit. Software engineers are no doubt the most-wanted personnel in the industry as projects are being launched daily. Technical writers, graphic designers, influencers, and so on are also sought after in the crypto industry.
As stated earlier, cryptocurrency is decentralized. This makes it possible for citizens living in countries where their currencies are not stable to trade freely from their nation to another.
Countries like El Salvador and the Central African Republic that made bitcoin their legal tender did this for their citizens. The low cost of transactions in cryptocurrencies is a solution to the problem of funds received across its border. The trust in the system of cryptocurrency has seen more use in financial tools, transactions, and a closer global economy.
Cryptocurrency has also been a useful tool for entrepreneurs today. Young entrepreneurs are making use of the blockchain to solve problems. Opportunities are being created to invest in, save, and send money from one place to another. This is in turn shaping global business practices.
Can Cryptocurrency Influence the Economy?
As seen above, cryptocurrency has a huge influence on not just the national economy but the global economy. These virtual or digital currencies are getting massive adoption in our world today despite their issues.
Cryptocurrency has helped to provide job opportunities for many people, especially in regions such as Africa and Asia. Exchanges and trading platforms have employed many people which have catered to their needs.
Many young people in Nigeria have taken to crypto trading as a source of living. They buy and sell crypto assets like BTC, LTC, and so on to earn profit/make passive income. Although its central bank has banned crypto transactions in its financial institutions, the impact of crypto cannot be overlooked as regulators later release rules guiding the industry.
Cryptocurrency has no doubt influenced economies positively. The issues with it which include price volatility, crypto scam, security, and so on have made nations restrict its use. Nevertheless, crypto and blockchains have been one of the technological advancements seen in this age. This can be seen in its impact on the global economy.
Conclusion
Cryptocurrency is an influence on the economy of the nation. It has impacted economies via its provision of jobs, low-cost transactions, opportunities in its blockchain, and so on.
Cryptocurrency is not yet fully adopted. Only a little percentage of the world’s population owns cryptocurrency. Nevertheless, cryptocurrency is becoming mainstream and gaining popularity in our world today. This means that as it expands its tentacles among the nations of the world, we can expect to see more impact on the global economy.
