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- Why are cryptocurrencies so popular?
- What are cryptocurrencies used for?
- How cryptocurrencies can help the global economy?
States and communities have been debating and discussing cryptocurrency for a long time.
Since the invention of Bitcoin and its launch, many people have become curious about virtual currencies, and every day thousands of new ones are launched.
Besides serving as a means of investing, cryptocurrencies can also be used to pay for goods and services.
However, some people aren’t convinced that they are efficient and secure. Others, instead, believe that cryptocurrency will dominate the market in the future.
Although there is a lot of uncertainty about how the situation will evolve, the states are now taking steps to make sure they are regulated.
Please continue reading if this sounds interesting to you. In this article, we will explain how cryptocurrencies can help the global economy.
What is cryptocurrency?
A cryptocurrency is a digital or virtual currency that is protected by cryptography, making it nearly impossible to copy or counterfeit.
Unlike traditional payment methods, it can circulate without the need for a central authority, such as a bank or government.
Why are cryptocurrencies so popular?
If you’ve read a few statistics about cryptocurrency on Statista, you’ve probably already become aware of how huge this market actually is.
There have been many questions relating to the reason why cryptocurrency has gained such popularity and appreciation throughout the world. Below are a few key points:
- Supporters of cryptocurrencies see them as the currency of the future and are rushing to purchase them, presumably before they become more valuable.
- Cryptocurrency supporters like the fact that cryptocurrencies do not depend on intermediaries, such as central banks, to manage the money supply. This is because central banks tend to inflate money over time, which further devalues the currency.
- Other cryptocurrency supporters like the technology behind cryptocurrencies, known as blockchain, because it’s decentralized and can potentially be safer than traditional payment methods.
- Speculators favor cryptocurrencies because they are gaining in value and don’t care about their acceptance as a medium of exchange in the long run.
What are cryptocurrencies used for?
Cryptocurrencies are used for a variety of purposes. Listed below are the most common ones.
Although cryptocurrency prices are volatile, which means their value can go up or down at any time, many people invest in them as a form of investment.
With the ability to invest any amount without a minimum, this form of investment is accessible to everyone, in any country, including those who are financially broke.
Investors may earn large gains if the crypto acquires value and its price increases substantially, thus ensuring the difference between what they invested and what they will earn as a return.
Form of payment
It was not that long ago that the only form of payment accepted by the government was fiat currency, or currency declared legal tender by the government.
Today, the times have changed, enabling clients to pay for whatever they want, with different methods of payment.
With cryptocurrencies’ introduction and growth in popularity, they also made a big impact in this field, becoming the new currency for payments.
Most crypto investors already use cryptocurrencies as a form of payment, and many merchants are allowing cryptos as a form of payment among the most popular ones, such as PayPal.
In the current era, many people use and prefer cryptocurrency over other means of payment for products and services.
Gains from interest
Cryptocurrencies also allow investors and holders to earn interest. In theory, cryptocurrency interest-earning accounts work just like traditional savings accounts.
They can deposit bitcoin and alternative coins without a lockup period or a deposit limit, then their assets earn compound interest, and they receive payouts and can withdraw funds as they please.
The interest rate is determined by market forces and is paid in the same cryptocurrency that investors have invested in.
The process is extremely simple and quick, and anyone all over the world can do it.
How cryptocurrencies can help the global economy?
Although it is widely believed that new virtual currencies are threatening the global economy, cryptocurrencies may prove to be beneficial on multiple levels and in different ways.
The following are some of the most relevant ones.
An increase in economic activities
Cryptocurrencies, although feared by many, have actually widened the scope of economic activities, in many areas, creating a thriving market.
Bitcoin, for example, which is mined using specialized equipment, has created many opportunities for those who produce and sell these devices as well as those who mint the coin itself.
However, it doesn’t end there. Several organizations, businesses, both online and offline, have benefited from virtual currencies by taking advantage of the opportunities they provide.
Blockchain technology and cryptos have prospered many careers in fields such as journalism, writing, graphic design, programming, and marketing, just to give one example.
Global distribution of wealth
A third of the world’s population doesn’t have access to any banking services. Therefore, when they are in need or in crisis, they have no one to turn to.
Those with access to loans and so forth are also generally discouraged by the high-interest rates.
Because of this, many people do not have adequate financial resources.
In such a situation, cryptocurrencies have proven helpful to give these people a chance as well. Since these virtual currencies are easy to use, allow immediate transactions, and are very volatile, users in every country can easily and quickly access them.
Investing in these currencies provides people with an immediate opportunity to make money and also utilize them to pay for goods and services.
Cryptocurrencies can therefore enable a more equitable distribution of wealth all around the world, which will particularly benefit less developed countries and people in poor financial circumstances.
Low transaction fees
Almost immediately after cryptocurrencies were introduced, people began benefitting from low transaction fees because they no longer needed and involved intermediaries.
The time and cost savings, of course, encourage more and more people to use these virtual currencies.
Currently, there are many trading apps and platforms that ensure fast and low-fee transactions for cryptocurrencies of all types. As an example, people can buy BNB on Moonpay, paying only a minimal commission.
More transparent transactions
All blockchain and cryptocurrency transactions are tracked on a distributed ledger since they are digitalized and automated, thereby making each transaction transparent and secure.
Nobody, including companies or organizations, can manipulate the ledger or transactions, which greatly reduces the risk of fraud and corruption.
Of course, this will result in a more transparent transaction system and a more secure way to buy and invest.
More sale opportunities for businesses
It has been mentioned several times already in this article that cryptocurrency serves as a form of payment as well. In particular, businesses of all sizes will benefit from this, no matter how small, medium, or large they are.
Popular payment methods encourage people to buy, and if they find the payment method that they prefer among those listed by a business, then they will be even more likely to purchase.
Thus, cryptocurrency-based payments create an opportunity for merchants to increase sales. Businesses that need to evolve and offer cryptocurrency as a payment option will also benefit from the first mover’s advantage and gain authority in the industry niche.
It has always taken a long time for international money transfers to complete, aside from their high fees.
Today, thanks to cryptocurrencies, it is possible to send money anywhere in the world in seconds while paying a low fee.
This enables and facilitates the exchange of resources and information among countries, thereby enhancing work, business, and individual financial opportunities.
As an example, it has made it easier for entrepreneurs to reach international markets rather than sticking exclusively to the domestic market.
A new era of crowdfunding
It wouldn’t be complete to discuss Bitcoin and cryptocurrencies without mentioning Initial Coin Offerings (ICOs). ICOs are currently the leading method of raising funds for blockchain-based startups.
With this new method of crowdfunding, companies or organizations can raise capital by using cryptocurrencies.
ICO crowdfunding works by investors buying cryptocurrency coins that represent shares in a project, just as the stock market works. In other words, if the company performs well, the shares will likely increase in value, and if the company is unsuccessful, the opposite will probably happen.
The new era of crowdfunding is imperative for empowering inventors, entrepreneurs, and creators as well as for fostering a sustainable economy.
The emergence of cryptocurrency has brought a new era of money and a positive change not only economically but also monetarily.
Throughout this blog post, it was evident that cryptocurrencies have positively impacted different areas of business and the lives and businesses of many individuals, companies, and organizations.
Many people are still uncertain about the use and the efficiency of these virtual currencies, but it isn’t long until they will become the norm in the investment and payment world.
I appreciate you taking the time to read this article. I hope it was informative and helpful to you.
If you want to read more about cryptocurrency, read this blog post on how crypto is changing remittances.