Bitcoin is the first and most well-known cryptocurrency. Even since its inception in 2009, it has made a great impact on the global economy. Satoshi Nakamoto is signed as a Bitcoin creator, and since Bitcoin came into circulation, it introduced the concept of decentralized digital currency. That means that now we have peer-to-peer transactions without the need for banks to serve as intermediaries. This innovation has brought new prospects to the world’s economy.
Ever since Bitcoin came into use, it’s been challenging traditional financial systems. When there are no intermediaries, your transactions are a lot faster, cheaper, and more secure. Decentralization is not only good for making things faster, but it’s also quite beneficial for those living in countries where banking systems are not particularly stable or financial services are limited. For example, we have Venezuela and Zimbabwe who are experiencing hyperinflation and/or political turmoil. Using Bitcoin can help people preserve their wealth when national currencies are going through a fall.
One of the sectors that is happy to embrace crypto is the gambling industry. Casino expert Kane Pepi says that online gambling platforms have adopted Bitcoin because of all its advantages (lower transaction fees, fast processing times, better privacy for users), but this is not the only cryptocurrency they’re using. There is also a growing number of sites for Ethereum owners, where players can enjoy great bonuses and even faster transactions compared to using Bitcoin. The benefits are even extending into the field of anonymity which is especially valued. From all seen above, it’s evident how cryptocurrency changed even the face of online gambling. Some regulatory challenges that often follow traditional payment methods are, with crypto, successfully bypassed.
Having cryptocurrencies as one of the payment options is changing the way people think about money and financial transactions. Digital currencies and blockchain technology have entered the limelight. From China to Sweden, central banks from all over the world are exploring or already developing their own digital currencies known as Central Bank Digital Currencies (CBDCs). These CBDCs would like to combine the benefits of digital transactions with the reliability of government-backed money.
Bitcoin has some influence in the investment field as well. Both institutions and individuals find it appealing. Many are investing in Bitcoin hoping for high returns and taking advantage of its volatile price movements. For instance, Bitcoin’s price surged from around $1,000 at the beginning of 2017 to nearly $20,000 by the end of the same year, only to fall significantly in the following months. More recently, it reached an all-time high of approximately $69,000 in November 2021 before experiencing further volatility. With such price fluctuations, Bitcoin got some praise as well as criticism. Some people now view Bitcoin as a speculative bubble and others as a legitimate investment opportunity.
What’s more, the impact of cryptocurrencies on the economy can be seen through their role in financial inclusion. Around 1.7 billion adults all around the world don’t have access to traditional banking services, according to the World Bank. But they can have access to crypto. Bitcoin offers an alternative means of being financially active. This means people without bank accounts can be a part of the global economy. All you need is a smartphone and internet access and you can send and receive Bitcoin and other crypto, even save and invest. That way they’re opening up economic opportunities that were previously inaccessible.
Still, there’s been some controversy about Bitcoin. One of the main concerns is its association with illicit activities. The pseudonymous nature of Bitcoin transactions can make them attractive for money laundering, tax evasion, and purchasing illegal goods and services. Some blockchain analysis firms have come up with tools to trace and combat illicit use, but this is still an important issue that regulators and law enforcement agencies are continually addressing.
Bitcoin has an interesting impact on the environment too. For the process of mining Bitcoin, you need to solve complex mathematical problems to validate transactions and secure the network. You also need to spend a significant amount of electricity. This intensive energy process raised alarms about Bitcoin’s carbon footprint, especially when the electricity is coming from non-renewable sources. Numbers vary, but some studies say that Bitcoin mining consumes more energy per year than some entire countries, such as Argentina or the Netherlands. Luckily, every challenge has a solution, and this particular issue led to finding more sustainable mining practices and a shift towards renewable energy sources.
Bitcoin is gaining popularity in the US and offshore. Major companies such as Tesla and Square are investing in Bitcoin, and some retailers are accepting it as a form of payment. Also, the advent of Bitcoin futures and exchange-traded funds (ETFs) has further integrated Bitcoin into the traditional financial system. This gives investors more avenues to gain exposure to this digital asset.
