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Bitcoin – its impact in global economy


1st Jun 2021 Managing your Money

Bitcoin – its impact in global economy

Bitcoin (BTC) is a cryptocurrency designed by Satoshi Nakamoto. BTC has certain qualities of other currencies. It is not easy to earn bitcoin, the supply of bitcoin is limited, and verification is easy. Bitcoin is acceptable in exchange for goods. Bitcoin can be saved and retrieved at a later time. These features make bitcoin a useful currency. 

United States declares BTC as a decentralized virtual currency. South Africa classify BTC as an intangible asset. Bundesbank refers to bitcoin as a crypto token. China declares bitcoin as an investment target. Bitcoin is also called an online payment system.

The active users of bitcoin have increased significantly since 2015. It is estimated that there are more than 4 million bitcoin users.

How to buy and sell Bitcoins

Buying and selling of bitcoins can be through both online and offline methods. Bitcoins transactions can be done through online exchanges. Bitcoins can be purchased using a cash card from a bitcoin ATM. It can also be purchased from another individual. Bitcoin ATMs are different from regular ATMs. Bitcoin machines are not connected to a bank. It is connected to the internet. Globally, there are more than 800 bitcoin ATMs.

Volatility of bitcoin

Bitcoin is more volatile than the U.S. dollar. It is also volatile than gold. Insufficient liquidity is the reason behind the high volatility of bitcoin. There are certain instances where volatility does not affect. Such instances are online gambling and tipping. 

Economists believe that volatility decreases when the usage of BTC increases. When Bitcoins are used for business purposes, it will become more favorable for consumers. These factors will help to decrease the volatility of bitcoin prices. Today, investors are ready to invest in bitcoin. They consider Bitcoin more stable than gold. In 2017, the price of a single bitcoin was more than the price of gold. To know more about the volatility of bitcoin price, register on the bitcoin trading website like Bitcoin Union

Different views about bitcoin

Many economists have a positive approach to Bitcoins. But some are skeptical about it. Senior economist Francois has a positive response towards bitcoin. David Marcus, President of PayPal, described bitcoin as an excellent place to invest assets. Bill Gates thinks that bitcoin is exciting. American officials declared at the senate that bitcoin has many legitimate uses. 

Bitcoin transactions are through online exchanges. Many merchants accept bitcoin payments. Bitcoins are used for real estate purposes in 2017. Merchants who accept bitcoin payments use service providers for conversion. Examples of such service providers are Bit pay and coin base. They charge less than 1% as a fee for this service.

Bitcoins are used for retail transactions. In 2019, Venezuela bank conducted tests for including bitcoin in central reserves. 

Bitcoin as an investment

Many Argentinian investors have purchased Bitcoins for protecting their assets or savings. In Cyprus, bitcoin transactions increase during the Cypriot crisis. Another investment method is the bitcoin fund. Forbes magazine has declared BTC the perfect investment of 2015. In 2015, bitcoin was in the first position in the currency tables of Bloomberg. The stock exchange of New York has declared a bitcoin index based on Coin base transactions. Venture capitalists have started many startups focused on bitcoin.

Bitcoin is also used for crowdfunding.

Political economy and bitcoin

Digital currencies like bitcoin work on the idea of decentralization of currency. In the Austrian economic thought, there is an idea called the free market. From the viewpoint of famous economist Friedrich Hayek, production and distribution of money should be completely free. This will decrease the role of central banks.

Libertarians are interested in using Bitcoins. Because bitcoin does not come under any central organization. Left-wing politicians also have a positive approach to bitcoin. They are of the opinion that banks protect elite interests. They believe that the regulated system is responsible for the financial crisis of 2007. As per the left-wing critics, bitcoin will remove the imbalance between the low and elite categories.

Benefits of using bitcoin

The main benefit of bitcoin is the autonomy of users. Users can spend Bitcoins without the interference of any central authority. The purchase of bitcoin is discrete. The personal identity of users will not be revealed. So, transactions will be anonymous. Payment of bitcoin is a peer to peer. It does not need any approval from the authority. For international payments, bitcoin costs only low transaction money. Bitcoins are easily accessible to users. Only a smartphone is needed for Bitcoin transactions. 

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