There has been quite an uproar about cryptocurrency for the past couple of years. You might have heard people talking about cryptocurrency and how they have gained an immense amount by investing in them earlier. But everything that involves monetary transactions affects the global economy and turns out to be a topic of greater concern for people and the government.
So in this article, we will discuss cryptocurrency and how this cryptocurrency affects the global economy in both a beneficial and concerning manner.
What is cryptocurrency?
The best way to understand something is to modulate it and then you will be able to understand it. The term cryptocurrency when modulated turns out to be “crypto and currency”, crypto stands for cryptic which is a method to put passwords or security keys that are known only to sender and receiver. And currency is the legally bound token that is shared between two parties and currency stands for legal binding of a specified value.
So cryptocurrency is the cryptic currency also known as virtual currency because like coins and notes this currency isn’t tangible but holds equal legal value. Let us discuss more crypto in our further article and how it is going to affect our economy.
Cryptocurrency vs normal currency
There are various reasons for differentiation that allows us to marginalize between normal currency and cryptocurrency and they are listed below.
| Normal Currency | Cryptocurrency |
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2. It is stored in e-wallets. |
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3. It uses a non-centralized manner of processing currency. |
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4. Its value depends on the invested amounts and stocks, it remains the same worldwide. |
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5. The cryptocurrency is mined by using complex algorithms and solving complex equations. |
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6. The transaction takes place between sender and receiver. |
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7. No charges are deducted on doing any transactions. |
How does cryptocurrency benefit the global economy?
Now that we have already discussed why the government is concerned over transactions from crypto, let us also discuss why it is the best choice for the user.
Blockchain
Cryptocurrencies use blockchain technology which is an advanced technique of sharing data packets, in this technique sender and receiver are given a private key that helps them to access the crypto wallet. This forms reliability and assurance in the mind of users and makes it a better alternative.
Entrepreneurs advantage
As reports show, with the rise in the use of cryptocurrency, the funding for blockchain startups have gone extremely high and this has paved the way for a huge amount of funding and finance for startups
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Also, you can read a reviews about them here https://greenfinanceinitiative.org/news-spy-review-is-it-legit-or-scam/.
Saves poorly banked countries
Various countries do not have a reliable and proper functioning banking structure so cryptocurrency is the perfect choice for them as it allows them to make transactions without the bank’s involvement.
Decentralized system
Cryptocurrency uses a decentralized system which means that it does not require verification of the central body to initiate a transaction whereas the record of the transaction is made in a public logbook where identities of sender and receiver are kept private.
Secret identity and Security
Another remarkable feature of cryptocurrency is that it keeps the identity of sender and receiver hidden and also blockchain technology provides users with assurance, safety, and security.
Prevents hacking
Cryptocurrencies are almost impossible to hack because of the sophisticated algorithm which makes them untraceable and therefore it keeps them safe, so your money will be safe and cannot be stolen or hacked.
The rise in Economic Activities
With the introduction of cryptocurrency, there has been a greater rise in economic activities which include foreign investments and transactions, and this is surely a sign of prosperity.
Low Transaction Costs
The transaction costs for cryptocurrency are almost minimal which ends up saving your money and performing safe transactions.
How cryptocurrency concerns the global economy?
The world governments are taking great concern in the rising interest and trends in crypto, so some countries remain neutral on the use of these currencies while some have allowed them and others have banned the use of cryptocurrency. Let us begin understanding why cryptocurrency turns out to be harmful to the economy.
Many countries have restricted the use of cryptocurrency because they utilize the positive sides of the virtual currency but cannot ignore its negative sides like China.
Foreign Investment
The grave concern by the government is FDI ( Foreign Direct Investment) because the government won’t be able to trace back the identities of the person who makes foreign investment in an enterprise or a company.
This increases the risk of transferring huge amounts of money without getting noticed.
Transaction Fee
The banks need to pay the rent of the building, wages of employees, maintenance, and various other charges so they gain it by charging a transaction fee to the user when he makes any payment but the transaction fee for crypto is minimal which poses it as a great threat for banking structure.
Instability
There is a wide risk-taking and instability with the value of these cryptocurrencies, in the cases of normal currency the value remains stable and shows very few fluctuations on the global market whereas the crypto shows fluctuation which can either be good or bad.
This makes it an unstable currency.
Decentralized system
The cryptocurrency transactions are logged down in a public logbook but the identity of the sender and receiver are kept hidden and this makes it impossible to track back transactions.
Now hackers take their payments in cryptocurrencies because they are hard to trace.
