Crypto-currency is an authoritative existing system of exchange that has security. It differs from the traditional currency that, whereas traditional currency is protected by central bank of the region where it is issued, crypto-currency’s security depends on the integrity of the system. Block-chain technology, the key technology behind crypto-currency has been termed as a disruptor of business processes in the globe. Have a look at some of the impacts of crypto-currency to the economy of the globe.
Disrupting the value of the dollar
The US dollar is the standard currency for global economy. Practically, all financial actors from the rest of the world function in the United States market. Thus, any upset in the US market shakes the entire globe. The US’s ability to maintain dominance in the world market relies on the standard of the dollar. This has however been disrupted by activities of crypto-currency. For instance, Bitcoin which has become accepted in business transactions has does not assist to maintain the standard of the dollar. Crypto-currencies such as the Bitcoin seem to be pushing the urge to de-dollarize the world economy. Countries such as Venezuela have in the recent times created their own crypto-currency to neutralize the US-led economic sanctions. Such moves to avoid the inflation caused by the sanctions have massively affected the value of the dollar.
Elimination of the middleman
Traditionally, the concepts of mainstream financial environment and international transactions have worked exemplary well with bodies such as banks and SWIFT. SWIFT is an acronym for Worldwide Interbank Financial Telecommunication. Financial institutions across the globe securely share information through this network. No single international money transfer can take place outside SWIFT network. However in the case of crypto-currencies such as Bitcoin, Litecoin and others, things occur differently. Authorization authentication of transactions does not require the middle men here. With crypto-currency, transaction occurs within the shortest time possible charging minimal transaction fees. Elimination of middle-men has not only disrupted the global economy but has also made it hard to trace transactions in to ascertain the participants’ identity. Central banks and other financial institutions have been unable to control the activities of crypto-currency. In the future, crypto-currencies are expected to disrupt the global system of central banking and promote cashless economies.
Simplification of the process of crowd funding
Crypto-currency has impacted the Initial Coin Offerings (ICOs). According obtained statistics, ICOs become paramount crowd-funding method for technology-based innovations. Similarly, entrepreneurs and developers no longer spend their time trying to convince financial institutions to invest in their ideas. Tangible ideas are traded directly to the public. Technology start-ups which may have never succeeded are now given the opportunity to substantiate within a short time. Government agencies around the world are now targeting the ICO, an indication that it is disrupting economies.
Crypto-currencies are acting as the agents of change in the global economy. The question has shifted from whether crypto-currencies are disrupting the world. The attention is now shifting to what the future holds as far as crypto-currency is concerned. It is a matter of time before the world establishes the extent the revolution will advance.