Crypto Impact on the Financial Markets
Crypto impact has been felt by millions of people ever since Satoshi Nakamoto introduced a blockchain-backed cryptocurrency in 2009. Thanks to the impact cryptocurrencies had on investors' portfolios in 2021, digital assets have established themselves as a successful currency since they have all the essential attributes (durability, utility, non-counterfeitability, transferability, divisibility, and scarcity) that confer value on money.
The economic impact of digital assets has been seen in several areas in national and global communities. As of June 2022, there are approximately 19,000 coins, per data retrieved from CoinMarketCap. There are approximately 300 million crypto users across the globe. Of these, 27 million are residents of the United States, according to Triple A (a member of the Singapore Fintech Association). What’s more, 1.5 million are residents of the United Kingdom, 1.2 million hail from Canada, 900,000 are in Australia, and more than 2 million are in Japan.
Although cryptocurrency started slow and could not impact a large sector of the global economy like the stock market in its first 10 years of existence, it saw hundreds of billions of dollars traded in the following years.
From the second half of 2020 to June 2022, cryptocurrencies have become the go-to asset for several investors who want to make gains in the short, medium, and long term.
The most popular and largest cryptocurrency by market capitalisation, Bitcoin (BTC), is considered digital gold by many market commentators because it can retain its value over time without depreciating. It has simplified several areas of payments and continues to break barriers in an area largely dominated by centralized finances in the last 50 years.
Here are some of crypto’s impacts on the global economy.
Crypto Impact on Global Economy Through Blockchain
Blockchain technology is the underlying infrastructure behind cryptocurrency. Blockchain technology has gradually moved into the mainstream and has been adopted by several Fortune 500 companies.
Many market experts believe blockchain technology has the potential to unlock billions of dollars. Companies actively developing blockchain solutions include but are not limited to the Bank of China, Samsung, PayPal, Alibaba, Walmart, J.P. Morgan, Nvidia, Tencent, Amazon, and Microsoft.
Overall, blockchain has impacted several financial institutions' cross-border transactions. Countries such as Ethiopia, in partnership with Cardano, are using blockchain to reduce paperwork by building a national identification (ID) blockchain system.
Cloud computing companies are using blockchain for the execution of smart contracts as well as resistance against hacking.
Text messaging applications have employed the possibilities of this technology due to its secure nature. Overall, International Business Machine Corporation (IBM) believes blockchain technology has increased automation, speed, and efficiency. It provides instant traceability, greater transparency, and enhances security.
Crypto Impact on the Job Markets
The rise of Bitcoin and cryptocurrency has created new job opportunities. In hiring more support workers, the crypto industry offers careers in marketing, management, IT operations and helpdesk, human resources, finance, accounting, sales, information design and documentation, industrial engineering, and software development.
Every year, thousands of jobs are posted with "remote work" first options available to prospects. Most importantly, companies under the blockchain technology and crypto umbrella pay above-market compensation to their employees.
As crypto continues to make the underbanked and unbanked a part of the global economic system and gains the support of millions of people in the mainstream, more liquidity will be poured into this sector. Once this happens, new job opportunities will be created, giving residents in unemployed economies a chance to earn a decent income periodically.
Crypto Impact on Unstable Domestic Currencies
Although fiat currencies are known as representative money, they have gained the confidence of billions of people over time.
Due to the success of the Great Britain Pound (GBP), Euro (EUR), and the United States Dollar (USD), they have become the go-to currencies for trade.
This has brought about terms such as exchange rates, currency appreciation, and currency depreciation. While countries in Africa, Asia, and the Middle East convert huge sums of money for less USD, EUR, and GBP, developed economies can go about foreign trade in their domestic currencies. Cryptocurrencies have leveled the playing field and makes it possible for all countries to trade under one accepted currency that is not controlled by a single country.
This is why countries such as El Salvador of Central America and the Central African Republic (CAR) have adopted Bitcoin as their official currency. With time, the impact of cryptocurrency on economies is going to be significant.
Crypto Impact on Low Transaction Costs
When money is sent from one location to the other, it must go through several channels before reaching the receiver. This normally comes with hidden fees unknown to the public. With cryptocurrencies, you can send and receive money via the internet and pay little in transaction fees.
Moreover, cryptocurrencies such as Ripple (XRP) and Stellar (XLM) play a substantial role in cross-border payments. They are used as on-demand liquidity (ODL), which facilitates transactions within seconds to anywhere on the globe.
This is why mainstream financial services companies such as Flutterwave, MoneyGram, and Azimo employ these cryptocurrencies to become the best cross-border payment solution networks. Crypto’s impact on the transparency of payment costs has made it easy for independent contractors (freelancers) and migrants to receive and send money to remote areas without losing more than 10% of the sent funds to fees.
Overall, the impact of cryptocurrency on the global world cannot be fully measured. It has become easy for all manner of persons to conduct legitimate business without facing any form of restrictions. Entrepreneurs can go into business and pay clients within minutes. Despite cutoffs due to crypto winter, people continue to find jobs. Trading crypto continues to impact millions of people positively since it brings them consist
Author: Brendan Beeken
Moni Talks Founder and Chairman Brendan Beeken is an entrepreneur, commercial strategist, investor, and philanthropist. He writes on a wide range of subjects, including cryptocurrency, decentralised finance, blockchain, business advice, and professional wellbeing, for news and business websites, as well as Latest Moni and his personal site, brendanbeeken.com. Brendan draws from his own research and more than two decades of personal experience in business to offer a unique insight, perspective, and commentary on diverse subjects. He is passionate about making the cryptocurrency space more accessible and encouraging safer and more responsible trading and investing. Brendan's LinkTree is https://linktr.ee/brendanbeeken.