Bitcoin is the first cryptocurrency that the world ever saw. As a digital currency that is unregulated and cryptographically secured, it holds a great deal of potential in changing the way we perform financial transactions. To ensure legitimacy, all transactions are recorded in a publicly distributed ledger known as the blockchain. Once the transaction details are recorded, they become immutable. Furthermore, there is no way to track the money as the information of the parties involved in the transaction is not revealed. This kind of privacy and technology has put financial institutions and governments on guard, who, up until now, held the power to control the economy. You can also gain investors by using a digital marketing and advertising technique called airdrops. Airdrops are blockchain products which allow the distribution of tokens or coins after a project ICO is completed. It’s a dividend or free cash given to people who invested with in your product, which provides them a lot of coins to take a position and use in future product. This creates a unending cycle that’s dynamic the approach individuals market their product.
Let us take a look at how Bitcoin is affecting finance, banking, and economies across the world:
- International Remittances
International remittance is nothing but the money sent home by a worker who is working in a foreign country. Presently, this international funds transfer is conducted by several major financial institutions like banks and wire transfer service providers such as Western Union. Their profit margins, to a certain extent, depend on the fees they charge for remittance services. For example, Western Union may charge you anywhere between 9% -15% to transfer money internationally.
However, with Bitcoin, you can transfer money easily with next to no costs. As long as you have the required wallet addresses, you can easily send Bitcoins without incurring hefty fees.
- The Impact on Banks and Businesses
Unlike fiat currencies, there is no governing body that is monitoring the creation of Bitcoins. They are released into the system when someone solves a computational puzzle, often referred to as mining. Once they are released, they become a part of the Bitcoin economy and can be moved around without any restrictions. Even though the blockchain stores the transaction data, it protects the identity of the parties involved through cryptography. In simpler terms, there is no way of finding who owns Bitcoins, unless they are converted into cash. This has hindered the ability of central banks to control the economy as it is difficult for them to track cryptocurrency transactions. As more people shift to Bitcoin, it is going to get trickier for them.
In addition to this, many businesses across the world have started accepting Bitcoin as a mode of payment. With low transaction costs, Bitcoin is rapidly piercing through the e-commerce space and more and more people are adopting it. Once again, unlike the conventional digital transactions where a central bank could track the exchange of money, transactions in Bitcoin are unregulated. This opens up new doors for online businesses to explore.
- The Politics of Bitcoin
Before the advent of Bitcoin, central banks were the ones who facilitated all monetary transactions online – be it direct or indirect. However, all that changed when Bitcoin came into the fold. It became a form of currency meant for the individuals alone and owing to its inherent design, no central authority can keep a track of it. It took the power from government and gave it to the masses. People are beginning to realise that digital currencies like Bitcoin are considerably better than their fiat counterparts because they are governed only by computer codes. There is no central bank that is telling what they can or they cannot do with their money. If Bitcoin is adopted on a large scale, it is quite likely that we will see people challenge the present economic structure.
- The Dark Side of Bitcoin – Dark Web and Tax Evasion
Dark Web is the part of the Internet that is not indexed by the search engines. It can be accessed only through special software and it serves as a marketplace for everything illegal. The merchants in these shady areas accept Bitcoin as a mode of payment which has unfortunately made it impossible for authorities to track such transactions.
Similarly, it has also become easier for people to move money out of the country and avoid taxes by using cryptocurrencies like Bitcoin. In its 10 years since inception, no government has been successfully able to regulate the movement of Bitcoin. This makes this decentralised economy a safe haven for tax evaders. Needless to mention, there is a dire need for regulation, although it is going to be incredibly difficult.
While the technology behind Bitcoin is definitely interesting, its very nature has enabled many people to circumvent the law. At the same time, cryptocurrencies like Bitcoin are part of a new asset class and its full impact is yet to be seen.