It’s been less than two decades since the first decentralized cryptocurrency hit the market, but there’s no doubt that crypto has made a lasting impact on the global economy. As of the third quarter of 2022, the world cryptocurrency market has reached a trillion-dollar market capitalization, or collective value of outstanding shares of stock. In addition, there are more than 20,000 cryptocurrency tokens in existence, 600 active cryptocurrency exchanges, and almost 300 million cryptocurrency traders looking to strike a fortune on their respective blockchains.
Big-name cryptocurrency coins like Bitcoin (BTC) and Ethereum (ETH) have now been part of the public lexicon for several years. But privacy tokens like Monero (XMR), stored in open-source XMR wallet environments, are also starting to gain traction. From a niche interest that was once cultivated only by tech aficionados, crypto has become a worldwide phenomenon since then. Judging by the trends exhibited in the global financial sector, it may also be nearing mainstream adoption.
What should you know about the economic impact of cryptocurrency—and why should you be excited about what crypto coins may bring to the table? Here’s a briefer on how crypto has transformed the world economy, as well as what potential crypto investors can look forward to in the coming years.
Lower Costs and Increased Transparency for Financial Transactions
Conventional financial transactions, like those that call for an intermediary like a bank, often tack on extra transaction fees to complete. This financial burden is shared by individual consumers and business entities alike. Ordinary consumers can end up accumulating steep costs on expenses like credit card fees, while businesses must expect to fork up huge amounts of money for service fees related to corporate banking.
For that reason, cryptocurrency-driven transactions have become an attractive alternative to the methods of conventional finance. Blockchains enable direct wallet-to-wallet payments that demand less from the involved parties in terms of both time and transactional fees. And contrary to the myth that crypto is inherently shady and obscure, crypto blockchains boast a high level of financial transparency. All transactions made on a blockchain are immutable, or incapable of being doctored once they’re recorded on the digital ledger. This is something that has brought peace of mind to many a global crypto trader and, thus, spurred a new wave of belief in cryptocurrency.
New Possibilities in Cross-Border Trade
The cryptocurrency boom has also carried over to the area of international trade. The same crypto technology that has enabled smoother, faster, and less expensive deals on the local front has also paved the way for more advantageous deals between international business entities.
Global businesses are now benefiting from the option to accept payments from international customers and business partners, with fewer delays and intermediary costs. As the world anticipates wider adoption of crypto technologies, it will become even easier to uphold this cross-border trade ecosystem and expand the international reach that businesses are capable of.
The Use of Innovative New Technologies Like Smart Contracts
Yet another positive effect that can be attributed to the rise of blockchain technologies is greater innovation within the financial sector. One perfect example is that of the smart contract, or a type of program stored on the blockchain that automatically implements a contract between the involved parties. The terms of the agreement are inscribed within the lines of code that comprise the smart contract. When certain conditions are met, payment makes its way from one wallet to another.
To illustrate, let’s say that a business entity and their supplier enter into a smart contract for the delivery of a certain number of products. When there’s documented proof that the supplier has fulfilled their end of the agreement, their payment will be automatically deducted from the client business’s wallet. This kind of arrangement can save time on payment settlement, which is a boon to highly time-sensitive supply chain operations.
New Opportunities for the Traditionally Underbanked
Lastly, cryptocurrency has proffered new opportunities for those who have difficulty opening bank accounts and completing transactions through the traditional banking system. Crypto wallets, which can be accessed and topped up using nothing more than a smartphone and an internet connection, can be a viable alternative to bank accounts or e-wallets containing fiat currency.
Experts are still studying the widespread use of decentralized currency in countries where fiat currency instability is a threat. But some remain optimistic that cryptocurrency can uplift people’s quality of life and help poorer countries get on even footing with their wealthier counterparts.
Conclusion: How Cryptocurrency Will Continue to Shape the Global Economy
The demand for cryptocurrency is a fairly new one as far as financial trends go. It may be too early to assume that the global economy will be widely decentralized in the next five years or so. But crypto has made enough of an impact to be considered a great force of influence in the financial world, and it will likely remain as such in the foreseeable future.
Author Bio: I’m Jaylin: Guest post service planner of Leelija and full time blogger. Favourite things include my camera, traveling,caring my fitness, food and my fashion. Email id: firstname.lastname@example.org