The Reign of Crypto Currency and How it Affects the World’s Centralized Economy.

 The word cryptocurrency would sound strange in say 10 – 12 years ago as the only form of currencies we knew were the notes and physical coins. Even at that, some people still do not understand what cryptocurrency is and how greatly it can affect the economy of a country. You may ask two questions; What exactly is cryptocurrency and how does it affect the economy, does it affect positively or negativity? Let’s find out! I will like to engage you with a little story about how it all started but first What really is the term “Cryptocurrency”?

Cryptocurrency is a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority. To explain it better, cryptocurrency is simply  a cross between a currency and a digital asset. Like a currency, you can use it to pay for things. Like a digital asset, you can invest in it for long-term gains.

 That said, back to my story. Cryptocurrency is no doubt the latest phase in the evolution of money. It is the newest attempt to reinvent the way we exchange money as the barter trade proved difficult and inconsistent to determine value which then led to the innovation of using gold and other precious metals, but this also was not good enough as there was a limited supply due to the difficulty in producing these metals. Then came currencies (government issued currencies) known as Fiat like the US dollars, euro , naira etc which is still used till date but because it is easy to make this fiats (note currencies) it started facing issues like inflation. People prefer payments that are convenient and transactional. Some historians and economist stated that cryptocurrency will be the most important payment invention since gold. Then came, bitcoin in the year 2008.

 However, it is also important to note that cryptocurrency will not be in existence without the internet as the origin of cryptocurrency fuels from the beginning of the internet which revolutionized the world like never before. It is Important to also  that decades ago before bitcoin, David Chaum who is regarded as the earliest pioneer of cryptocurrency he published the idea through a published article where he stated that instead of fiats we can also have an untraceable digital cash.

 He believed that privacy was necessary for an open society in the internet age and he knew the government couldn’t be counted on to provide it, so he started a company called ‘Digi cash’ which later went bankrupt forcing him to abandon the project. Well, fast forward to the present day, we have several cryptocurrencies like Bitcoins, Ethereum, doge coins etc. And I am sure you must be wondering how can a decentralized medium of exchange and payment system work in  centralized economy and like everything, in as much as it has it advantages it also has its disadvantages.

Recall that even before online paying/transactional platforms such as E-gold and PayPal the idea of even transacting digitally was frowned upon due to technology issues and other problems but PayPal and E-gold were one of the first companies to prove that the cyber space can be utilized to that effect. 

Although, this platforms are centralized as it answers to somebody or some persons while cryptocurrency doesn’t. No one owns or controls it hence you would say a high risk factor, or don’t you think?  Let’s go further into this mystifying and unsettling world of cryptocurrency.

Since the inception of Bitcoin in 2009, the economic impact of cryptocurrency has been both overt and subtle.

 Now in its eleventh year of existence, the digital or virtual money that takes the form of tokens or coins has established itself as a viable currency and form of investment, and the economic impact of cryptocurrency is evident in a number of areas in national and global communities.

As of January 2020, more than 2,000 cryptocurrencies exist and nearly 36.5 million people living in the U.S. own some form of cryptocurrency. Although cryptocurrency as a whole hasn’t impacted larger sections of the economy like the stock market, 2017 saw hundreds of billions of dollars flow into cryptocurrency, further establishing it as a viable stock to invest in. In fact, experts consider cryptocurrency to be “digital gold” because, like precious metals, it retains value without the risk of depreciation.

Here are some of the ways the economic impact of cryptocurrency has manifested:

Economic Impact of Cryptocurrency Through Use of Blockchain

Blockchain which is the underlying technology behind cryptocurrency, has slowly moved into the mainstream. So far, Blockchain technology has proved to have impacted the following business practices in several industries:

Blockchain has improved financial institutions’ cross-border transactions,

Messaging apps have used the technology in favor of deals with private investors,

Car leasing and sales can use Block chain to streamline car leasing,

Cloud computing can use Blockchain to execute smart contracts and resist hacking,

Government and public records can use Blockchain to reduce paperwork and fraud while increasing accountability.

Economic Impact of Cryptocurrency On Job Markets

The number of jobs in the Blockchain industry increased from just over 1,000 in 2016 to over 4,000 in 2017. Software engineers have been the most directly sought after professionals for the cryptocurrency industry. And while this job market has fluctuated in the past few years, interest in these professions have not faltered.

So you see, you would agree with me that it has a huge impact in the economy of a country. However let’s take a look at some of its downsides.

Disadvantages of using cryptocurrency

There are some business disadvantages to using cryptocurrency:

It is possible to lose your virtual wallet or delete your currency. There have also been thefts from websites that let you store your cryptocurrency remotely.

The value of cryptocurrencies such as Bitcoins can change significantly, so some people don't feel it is safe to turn 'real' money into Bitcoins.

The cryptocurrency market is not regulated by the Financial Conduct Authority (FCA) so there are no rules in place to protect your business.

If companies or consumers move to a new cryptocurrency from you or stop using digital currencies entirely, it could lose value and become worthless.

Cryptocurrency exchanges are vulnerable to cyber attacks, which could lead to an irreparable loss of your investment.

Cryptocurrency can be vulnerable to scams. Scammers often use platforms like Facebook, Instagram and Twitter to trick people into these investments.

Solutions to curb some or all of these disadvantages are however being provided and with time it will be a better currency someday. 

                                                                             Name: Ekemezie Vivian.C.

                                                                                                            

State Code: OS/21A/2737

Course: Marketing

Institution: University of Benin

State of origin: Anambra