The blockchain technology and cryptocurrency have created a lot of buzz since their introduction a few years back. The cryptocurrency argument is rampant on almost all communication channels from social media platforms to news broadcasts, and even the government legislation. Blockchain technology, which is core technology behind cryptocurrency is also regarded as the major contributor to the disruption of traditional technologies and business processes.
Cryptocurrencies have started a revolution that has the potential to reinvent traditional financial and social structures. Bitcoins became the first cryptocurrency to start the bandwagon with deep structure, wide adoption, and dynamic exchange. Many companies are striving to create ICO campaigns to sell tokens to the public and raise money. Lets delve deeper to analyze the impact of cryptocurrency on the global economy:
Challenging the Dollar Standard:
The global economy relies primarily on the U.S. dollar as almost all the international transactions happen using the U.S. dollar. As the dollar is the reserve currency of the global economy, any upheavals in the U.S. financial market send shockwaves around the globe. The emergence of bitcoins and other cryptocurrencies played a major role in the decentralization of financial transactions, changing the dynamics of international trade, foreign relations, diplomacy, and the impact of economic transactions.
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Cutting out the Middleman:
The existing financial environment needs clearance from entities like banks, clearing houses, and Society for Worldwide Interbank Financial Telecommunication (SWIFT) for any international transactions. The SWIFT network handles all the international transactions, acting as the governing body for all the foreign money transfers. Cryptocurrencies provide a peer-to-peer transaction network, which eliminates the need for a middleman to authorize and authenticate transactions. Unlike the SWIFT network, the transaction fees in the cryptocurrency exchange are also very minimal.
Simplifying the Crowdfunding Process:
The impact of initial coin offerings (ICOs) has been phenomenal as it has become the leading crowdfunding method for technology-based startups. The ICOs allow any tangible idea to be tokenized and sold to the public directly, eliminating the need for venture capitalists, banks, and angel investors.