4 Ways Investing in Cryptocurrency Transforms the Global Economy
One of the main reasons why Bitcoin has successfully obtained the acceptance of many individuals and investors is because of its nature for being a decentralized currency that is not issued or governed by any government or financial entity; instead, it is a network that works by a collective consensus of users around the world, each verifying and keeping track of every transactional record on the blockchain. Each year developments in blockchain technology continue to push the boundaries, gradually gaining the trust of the public to start investing in cryptocurrency.
It would only be a matter of time before skepticism turns into millions of transactions running through the blockchain with every passing minute. These virtual assets in the form of cryptocurrencies have changed the lives of many people, allowing them to increase their capital drastically with the tokens they acquire and take advantage of new investment opportunities in the ever-growing blockchain.
Transactions overseas: Investing in cryptocurrency gives you access to a more direct payment system
Generally, if a person invests in cryptocurrency and wishes to carry out a banking transaction between different (and distant) countries, a high commission is applied to the transaction and results in losses for the sender of the money. Even using fiat payment processors implies that you are going to lose an amount equivalent to the percentages established by each of the individual financial institutions.
For example, Bank of America charges a fee of $30 – $45 USD for outbound wire transfers, depending on the type of transfer. Not to mention the processing time that can take between 1 or 2 business days.
Investing in cryptocurrencies allows users to send a sum of money to any location they wish with a much shorter time frame. And depending on the cryptocurrency they use, the fees applied to said transaction would be much smaller compared to a conventional bank transfer.
Carrying out a cryptocurrency transaction is in a certain way similar to bank transfers, with the difference that you will not have to specify as much data since it will only be enough with the total amount, a reason (optional, depending on the wallet) and the address to send the tokens.
These multi-signature addresses are read as a series of numbers and letters mixed together, which will be used as a destination to transfer money. Depending on the cryptocurrency you use for a transaction, the tokens could arrive in a matter of minutes (or even less).
In the case of Bitcoin, transactions are simple messages that contain information and take approximately 40 minutes to be confirmed by the network. These “messages” that can be programmed and digitally signed by means of cryptography and sent to the entire network for validation. This is the reason why they say that Bitcoin is programmable money. Also, since transactions on the Bitcoin network are public, they can easily be found within the blockchain network.
Cryptocurrencies facilitate economic growth by streamlining international remittances
Many countries in Africa, Asia and South America are going through a tense economic situation, especially due to the consequences of quarantine during the COVID-19 crisis, which is why they depend on relatives in other countries to maintain their homes. Before cryptocurrencies, this was a bit difficult because the currencies were different and there are exchange controls, so they ended up using intermediaries to send remittances to people at home.
Thanks to investing in cryptocurrencies, all a person needs is to register in an exchange platform, deposit the funds to the wallet (they generally accept deposits in BTC) and they can exchange their tokens for the fiat currency of the country where their relatives live. As a result, the money from these remittances would reach the beneficiaries’ bank accounts almost instantly.
This aspect of the crypto world changes the landscape for thousands of families who have been able to increase their quality of life thanks to the money they can receive from exchange platforms, thus meaning the difference between a decent life and hunger.
Investing in cryptocurrency means reducing intermediary parties for more direct transactions
Cryptocurrency transactions are defined only between two parties: the sender and the beneficiary. The interesting thing is that both participants can witness the validation process of the transaction. These transactions do not require intermediaries to process and approve. Rather, the system is based on a network of interconnected nodes that validate the information contained in the transactions. Making the process much faster, safer and more reliable after investing in cryptocurrency.
Suppose a person wants to carry out a BTC transaction. The beneficiary can search the transaction on the blockchain and wait until there are 4 confirmations for it to be processed and attributed to their wallet. This makes the payment process much more reliable and straightforward.
Other advantages of crypto transactions include:
- While carrying out a transaction through the traditional financial system requires hours or even days for approval or denial. A crypto transaction can be confirmed in 40 minutes, although other cryptocurrencies have faster networks and can process transactions in a matter of seconds.
- It does not require intermediaries to process and approve operations. Rather, its system is based on a network of interconnected nodes that validate the information contained in the transactions. Making the process much faster, safer and more reliable.
- Once a cryptocurrency transaction is made and added to the blockchain, it is virtually impossible to reverse or modify. Also, cancellations or refunds are not available in this system, after the transaction is made. Which generates a great advantage in various areas of economics and finance.
- Crypto transactions are carried out using public addresses and private keys. Where the private keys give you the right to spend the bitcoins as if it were a pin or password. And public addresses allow you to send or receive bitcoin transactions without the risk of theft.
- The fees paid to miners to process a transaction are really low. This in comparison with the percentages requested by banks or other traditional systems.
Investing in cryptocurrency facilitates the quicker adoption and refinements of these direct transactions, as more and more people realize the substantial benefits of cryptocurrency.
Minimize reliance on government-issued currency (Fiat)
It is an undeniable fact that government-ruled financial institutions often exhibit sub-standard policies, suffer from inconsistencies and transparency issues, which results in all sorts of unpleasant social and economic scenarios. We have seen several currencies suffer at the hands of inflation, as in the case of Venezuela whose inflation rate has swept the floor with the lives of citizens. Relying on the fiat monetary system in a country where poor decisions are made could spell bankruptcy for a person.
However, since cryptocurrencies are not controlled by any government or obey any type of jurisdiction, so they provide their users with a refuge against incapable governments that destroy the economy of their countries with every bad decision they make.
In fact, considering the deflationary technology of Bitcoin, we can say that saving BTC tokens is safer and more rewarding than saving dollars in a bank.
Every 4 years an event called “halving” happens in the Bitcoin network, in which the mining reward is cut in half. Thus, every 4 years fewer BTC tokens will be mined and it will be more difficult to get 1 full BTC than before the halving. Remember that this encourages people to be willing to pay more for a token than before.
To conclude, investing in cryptocurrency have the potential to invoke an economic transformation on a global scale. The four ways we listed above are just the tip of the iceberg. Once cryptocurrency earns more public validation and becomes adopted into the mainstream society, its potential will skyrocket to even higher.
For more insights, information, and the latest updates on cryptocurrency, explore the different topics we’ve published on Easy Crypto.
Get the latest updates on your email
Having secure storage to manage your digital cryptocurrency assets is an important part of your…
NOTE: the Easy Crypto wallet is no longer offered for new customers. If you have…
If you’ve been active in the crypto space recently, you’ve likely heard or come across…