How has cryptocurrency changed the global economy?

Digital currencies have removed many of the borders that limit a truly global economy. With access to cryptocurrencies, anyone with access to a computer or cell phone has access to a digital wallet and a crypto exchange. As a result, more people and projects are able to participate in the global economy. 

A Truly Global Currency

Because of the speed and boundarylessness of cryptocurrencies businesses on opposite sides of the world can make same-day transactions. What’s more, people in remote parts of the world are now able to participate in the economy. Cryptocurrency is putting more money in more people’s wallets because its design can easily create micro-loans and micro-economies. 

Cryptocurrencies have allowed the unbanked to gain access to bank accounts and circumvent the limitations of corrupt governments. Currently, our financial institutions create unnecessary limitations for many people around the world. There are an estimated 1 billion unbanked adults today. 

This is in large part because people in developing nations and remote locations do not have access to physical banks. And if they do, many do not have the required minimum to open a bank account, nor the necessary ID. This may sound bizarre to those living in developed nations, but being unbanked is a very real problem. 

Until the creation of Bitcoin, if you did not live in a developed area with access to banks and financial supports, your economic potential was severely limited. The creation of secure digital currencies that run on blockchain platforms and encryption demonstrates what a truly global economy can look like. 

Eliminating Middlemen and Financial Barriers

One of the greatest limitations to a global economy is trust. Until Bitcoin, we have needed to rely on institutionalized financial services. To run a successful business, we need to know that we won’t be welched on. As such, we rely on banks and governments to secure transactions. 

But cryptocurrencies do not need such intermediaries, because they are automated, and operate with computer code. As such, transactions are as simple as “stop” and “go”. So, if your account does not have sufficient funds, the code will not be complete and therefore the transaction cannot be confirmed. 

ICOs and Crowd Funding

Another way that cryptocurrencies expand their reach is through Initial Coin Offerings (ICO). ICOs are a lot like IPOs (Initial Public Offerings). ICOs work as a source of crowd-funding for new projects, as well as gives holders of the coin stake in the project. Because, if the project is successful, the coins purchased during the initial offering will increase in value.

The most famous and successful ICO is the Ethereum blockchain project in 2014. In the first 12 hours of the sale approximately $2.2 million worth of Ether was purchased. By the end of the sale, more than 50 million ether had been sold, which had an estimated value of $17.3 million US. 

Because cryptocurrencies are boundaryless, investing in projects is much easier. And, investors can also contribute as much as they like. This is far different from traditional stocks, which have very restrictive access and expensive buy-ins. 

International remittance ex. JP Coin and Tether

Cryptocurrencies are now used for international remittance. JP Morgan has a cryptocurrency that is used to make same-day transactions. Each JP Coin is worth $1 US and is redeemable for a 1:1 value. Whereas traditional payment settlements can take several weeks, cryptocurrencies take only a few hours, allowing transactions to move along at an expedited rate. 

Tether is another example of a cryptocurrency remittance project. Tether coins are also backed by fiat currencies. Technically, Tether is a stablecoin because its value is backed by fiat currency, unlike Bitcoin, which is not. Tether is used to bridge fiat and cryptocurrency transactions while increasing their speed and decreasing the cost. 

Bitcoin was created in 2008 in response to the failures of traditional financial institutions. By building a global digital currency, its creators sought to shift the power structure of our financial world. The success of blockchain-based currencies has, unsurprisingly, led to a new global economy. An economy that is not only more technologically advanced but more inclusive as well.