How cryptocurrency and blockchain technology will advance incredible finance in 2023
In 2009, some developers introduced an alternative form of transaction known as Bitcoin. This coin was the first cryptocurrency whose main purpose was to displace traditional currency. Since then, many types of cryptocurrencies have been introduced, with an estimated market capitalization of around $2.65 trillion.
Interestingly, some groups of investors have profited immensely from blockchain technology since many people around the world need to gain more knowledge about blockchain technology. Significant companies such as Overstock began accepting Bitcoin as a payment method when making online purchases in 2014. Also, well-known companies such as Pavilion Hotels, Mastercard, Starbucks, Paypal and Visa began adopting this method.
But on a personal level, cryptocurrency can affect our lives just like cell phones and the internet have over the years. The purpose of telephones was to enable people to communicate over long distances. Bloggers like CryptoManiacs aims to share knowledge and provide crypto recommendations through an accessible platform.
Later, our lives were influenced by both, from music to alarm clocks. As for the economy, Bitcoins can affect the economy because they have the potential to develop or kill central banks. Read through this crypto guide as we discuss how Bitcoin and blockchain technology will advance financial excellence in 2023.
Why cryptocurrencies are gaining popularity
While transferring regular currency from the US to Canada, the sender from the US will pay some fees to the intermediary. Then the middleman will look for some details, send the dollar to the recipient and charge a few. In the case of Bitcoins, no such processes and restrictions are involved. Mr. A can send digital currency to Mr. B without the help of an intermediary.
As for the fiat currency system, it will be a failure if there is currency manipulation. The actual value of the money will depreciate and there will be no return on the investment. During the steady rise in inflation, cryptocurrency like Bitcoin is now at an edge over other currencies.
During the covid-19 period, the stability of traditional currency was affected by inflation. After Covid-19, people started adopting blockchain technology for financial transactions. Individuals look for oversized cushions during hyperinflation to protect purchasing power and wealth.
Crypto investors believe that a digital currency will soon become a mainstream asset. The digital currency market has increased eight times since 2020. In 2020, the world experienced disruptions in economic activities due to the Covid-19 pandemic. This pandemic caused negative consequences for the economy worldwide, with a huge drop in asset prices. This growing fear creates a possible environment for Bitcoin acceptance.
The price of Bitcoin increased due to the limited supply of cryptocurrency. Bitcoin investors like volatility rather than a one-sided market. The crypto market grew in fame with enough volatility.
How are countries reacting to cryptocurrencies?
The response to cryptocurrency from central banks in many countries is lukewarm. Although some countries support the use of Bitcoins, others do not use them due to the high level of volatility. Control of tax and capital has also become an important topic of discussion. However, many banks want to develop a system to match the blockchain payment speed.
In some countries, the law made Bitcoin-related activities or transactions illegal. Therefore, financial organizations such as banks do not participate in any crypto transactions. On the other hand, some countries want to complement their financial system with crypto instead of replacing them.
How will cryptocurrency affect global investments?
Because the correlation between the traditional market and Bitcoins is at the lowest level, they are held as assets and seen as tools for diversification. Moreover, it prevents the portfolios from futuristic risks. This security is the main reason for crypto’s rise many exchanges Products.
However, some financial experts believe that the cryptocurrency crash will have a major impact on the market, just like how mortgage-backed securities contributed to the global financial crisis in 2008. The total market capitalization of cryptos is around $2.65 trillion in 2021, with over 13,000 cryptocurrency trading globally. In November 2021, Bitcoin had 42.2 percent dominance, and Ethereum came in second with 19.6%.
How will cryptocurrency benefit the world economy?
You do not need a third party during cryptocurrency transactions, which helps improve processing speed. Since there is no need for a third party, the transaction cost is low. The low transaction costs make it possible to increase the transaction volume effectively.
There is also no need for a physical place where individuals come and carry out transactions. There is a lower value of fixed costs because wages are not required, and utility bills or rent are. Some traders do not have a minimum deposit requirement.
In addition, cryptocurrency does not have geographical barriers. Thus, no agency can monitor transactions. Therefore, this capability enables quick and easy transactions for business organizations worldwide.
As of November 2021, Bitcoin traded for over $59,000. Many people will need help to buy one Bitcoin. Therefore, they can buy a fraction of BTC. A person from USA can start from as low as $50. Cryptocurrencies can act as common currencies between different economies, facilitating more trade.
A peer-to-peer network supports the cryptocurrency blockchain system. Thus, unlike the fiat currency, the transactions are decentralized. Cryptocurrency users believe they should fully control their money instead of the traditional bank. Moreover, multinational companies usually borrow in domestic and foreign currencies. With the addition of cryptocurrencies, there will be a diversification of exposure. So, Bitcoins will provide access to different loan portfolios.
In addition, there is secrecy since the sender’s and receiver’s information is kept in the blockchain. There are many security stages around the report, which improves the mining activity.
Contractors will be able to accept payment in multiple currencies instead of traditional currency. The distributed ledger technology supports the Bitcoin network and is digitized and automated. Thus, this system eliminates the risk of corruption and fraud; this is the biggest problem with the fiat currency system. Neither individuals nor companies just want to become victims of theft or fraudsters.
