We’re swimming in the “information age,” which has wrought enormous changes in our lives. It brought us the Internet. And with that, the digitization of countless industries.
However, one thing that has remained constant for a long time is the way our currency operates. Whether through banks, loans, or currency exchanges, they all work in a similar way to influence how we use money and the possibilities it offers.
A new form of currency may change all that, and even possibly disrupt the way we use money. That new currency is called Bitcoin. Money is something that transcends borders and affects individuals around the globe. As such, it is an international issue that concerns all. Bitcoin has that potential as well.
So, what is Bitcoin?
According to The Bitcoin whitepaper, “Bitcoin: A Peer-to-Peer Electronic Cash System,” Bitcoin is an online currency, digitally held, for use by anyone. As more and more businesses make use of electronic payment methods, and an increasing amount of money is transferred electronically from person to person, there is a growing need for our current financial industry to innovate. The current system is one in which the bank holds your money, in an individual trust for you. With use of a currency such as Bitcoin, money is not owned by any single entity, but is instead decentralized. The money can be directly accessed by the individual, and therefore no third party needs to be involved in the process. This revolutionary currency is termed a cryptocurrency, and it will have a big impact on the future.
Cryptocurrencies, such as Bitcoin, have the potential to change the world’s economy. While this may be a bold statement, it holds some truth when considering the currency’s impact. One of the major parties affected by this new currency are the people, for consumers who need money to pay for daily expenditures, those daily transactions become an easier task. All with the power of online tools, paying for things will be easier.
Furthermore, with the increase in international transactions, Bitcoin allows individuals to pay using the same currency. This means a lack of transaction costs and the need for currency exchange. Moreover, it is simply easier to obtain Bitcoins. Whereas, when you open a bank account you need personal details and the bank’s trust that you will be responsible with the money, this is not the case for Bitcoin. Anyone can own Bitcoins and use them with total anonymity.
The ease with which Bitcoins are obtainable does not come with its problems, however. There is much worry about the security of an online currency, and the possibility of hackers stealing Bitcoins is always present. Moreover, the anonymity that Bitcoin provides is itself dangerous, as it can lead to its use for illegal purposes. Much like in the earlier stages of Bitcoin, where it was used in the drug marketplace of the “dark Internet,” the worry is always there. However, these possible drawbacks may be counteracted by the increased use of Bitcoin. As the currency grows, more validation is credited to its users, and thus a safer environment is created.
Another aspect to consider is the impact on political entities. An article by Unocoin explains the economic effects of Bitcoin and its political impact. One of the major appeals of Bitcoin is the lack of control that governments have over it. This may benefit individual consumers, as governments don’t have the power to depreciate the currency or control the output of Bitcoins produced. Rather than being controlled by political entities, the currency is controlled by code and digital tools. This could disrupt the way in which governments deal with money, and it could have larger social impacts yet to be discovered as this form of currency develops over time.
Furthermore, a Forbes article also contemplates how the impact extends to entrepreneurship and the way new companies are continuously entering new markets. With cryptocurrencies, fees and the other usual costs of opening a business are diminished, which allows more individuals to become entrepreneurs more easily. And Bitcoin itself becomes an aspect of new businesses that can attract customers. As such, new businesses may decide to differentiate themselves by allowing its customers to use Bitcoins. This may bring about new changes within entrepreneurial markets.
It is not completely clear the direction in which Bitcoin will go in the near future. What is clear, however, is the enormous impact such a currency could have, and the growing importance of it—whether for everyday consumers, governments, or entrepreneurs.
Alejandro Cerecedo (Spain)