What’s the Impact of Crypto on Today’s Economy?
According to a report, the impact of cryptocurrency on the global economy will reach $1 trillion by 2025. It is indeed massive and will only grow as more people adopt cryptocurrency.
The economic impact of cryptocurrency is hotly debated. Some finance experts believe that it has the potential to revolutionize the global economy, while others believe that it is nothing more than a fad. However, there’s no doubt that cryptocurrency is affecting the global economy in both good and bad ways.
Besides, cryptocurrency is still in its early stages, and it’s difficult to predict how it will develop. Nonetheless, there are a few potential scenarios that could play out.
If you look around the world, you’ll see that crypto has a major impact on big and small economies. Let’s understand this further by examining some of the most notable examples.
The Venezuelan Economy
The Venezuelan economy is in a state of crisis. Inflation is skyrocketing, and basic, everyday necessities are becoming increasingly unaffordable. The national currency, the bolivar, is practically worthless.
The Venezuelan government has responded to the crisis by introducing a new cryptocurrency, the petro. The petro is backed by the country’s oil reserves, and it is meant to be used as a tool to combat inflation.
Although petro has been met with a lot of skepticism, it has significantly affected the Venezuelan economy. In just a few months in 2018, the petro became the second most-used currency in the country, behind only the US dollar.
The petro has also given the Venezuelan government a way to circumvent US sanctions. By selling the petro to investors, the Venezuelan government has raised much-needed foreign investments. The petro has been a lifeline for many Venezuelans during this economic turmoil. It has enabled them to buy everyday necessities and has even allowed some to escape the country.
However, one fact remains true; bitcoin is the best way to invest money in cryptocurrency for beginners. So, if you’re a beginner wondering how to buy bitcoin online, you can find reliable resources with a simple Google search.
But to buy bitcoin in Venezuela, you’ll need to use a peer-to-peer exchange like LocalBitcoins. Most importantly, don’t forget to do your research and only invest what you can afford to lose.
The Island of Malta
Malta, a small region in the Mediterranean Sea with a population of under 500,000, has made strides in cryptocurrency. In 2018, Malta became the world’s first country to pass legislation regulating cryptocurrency and blockchain technology. The Maltese government is exceptionally open and welcoming of cryptocurrency and has even attracted some new exchanges to the island.
The most notable example is Binance, one of the largest cryptocurrency exchanges in the world. Binance relocated to Malta after a crackdown on cryptocurrency in China.
Since then, Binance has had a significant impact on the Maltese economy. The company has brought in many foreign investments and created new job prospects. In addition, Binance has also helped boost tourism in Malta.
The Japanese Economy
Japan is one of the world’s most developed economies and has been a leader in cryptocurrency adoption. In 2016, Japan accepted bitcoin as a legal form of payment. Since then, the use of bitcoin has exploded in Japan.
Today, over 260,000 retailers in Japan accept bitcoin, including retailers like Bic Camera and Microsoft Japan. The Japanese government has also been supportive of cryptocurrency. In 2017, the Japanese government created a law that taxes cryptocurrency profits at 20%, much lower than the corporate tax rate of 40%.
The Japanese economy has been thriving recently, and cryptocurrency has been a big part of that.
The South Korean Economy
South Korea is another major economy that has been embracing cryptocurrency. In 2017, the South Korean government created a set of regulations to govern the cryptocurrency industry.
It has caused a boom in the South Korean cryptocurrency market since over 2 million people in South Korea own cryptocurrency today. The South Korean government has also been supportive of cryptocurrency.
For instance, in 2018, the South Korean government announced it was considering creating an independent cryptocurrency.
However, the South Korean economy has not been all sunshine and rainbows. In 2018, the South Korean government imposed a ban on initial coin offerings (ICOs), a significant blow to the South Korean cryptocurrency industry.
The Chinese Economy
China – the world’s largest economy – has been a major player in cryptocurrency. In 2017, China was responsible for over 60% of all bitcoin trading volume.
But things have changed in recent months. In September 2017, the Chinese government banned ICOs, sending shockwaves through the cryptocurrency world.
Then, in January 2018, the Chinese government began cracking down on cryptocurrency exchanges. It caused a major sell-off in the cryptocurrency market.
Since then, the Chinese government has taken a more hands-off approach to cryptocurrency, but it is still unclear what the future holds for cryptocurrency in China.
The Indian Economy
India is another large economy that has been hesitant to embrace cryptocurrency. In 2017, the Indian government warned against investing in cryptocurrency, but things have changed in recent months.
In February 2018, the Indian finance minister announced that the government was open to the idea of cryptocurrency.
It is a major change in stance from the Indian government and could lead to more cryptocurrency adoption in India.
The Future of Cryptocurrency
Cryptocurrency is here to stay. It is a new asset class that has the potential to change the way we think about money.
We can expect higher volatility in the cryptocurrency market in the short term. It is to be expected, as the market is still young and immature.
We can also expect a specific cryptocurrency to become more mainstream in the long term. We will see more governments adopting cryptocurrency and various businesses accepting it as a reliable payment mode.
Cryptocurrency is still in its infancy, and its future is somewhat uncertain. However, one thing is for sure: cryptocurrency is altering the finance sector and will continue to do so.
The Bottom Line
Cryptocurrency is spelling a significant impact on the global economy. Some countries are embracing it, while others are cracking down on it. The future of cryptocurrency remains uncertain, but it is clear that it is here to stay. So, remember to conduct ample research before investing in any cryptocurrency. But cryptocurrency may be the right option if you’re looking for high-risk, high-reward investments.
This article has been published in accordance with Socialnomics’ disclosure policy.