Imagine a world where you can purchase anything from your morning coffee to your weekly groceries without exchanging any physical currency. It’s called cryptocurrency, and it could be here sooner than you think. Bitcoin and other cryptocurrencies are the focus of a new era in finance, and the question of whether they will take off has been on everyone’s mind.
With many skeptics expressing doubts, it’s helpful to look at what the potential effect of a widespread cryptocurrency would be on all our lives. If you’ve been living under a rock for the last decade, cryptocurrencies are decentralized digital currencies that use cryptography to secure transactions and control the creation of new units. Bitcoin and other similar cryptocurrencies, including Ethereum and Litecoin, are designed to be independent of any country. In the same way that email is one of the few communication methods that can’t be censored or controlled by any one entity, cryptocurrencies aim to be a medium of exchange that can’t be interfered with either. A decentralized cryptocurrency would replace the need for banks, governments, and other financial institutions. A lot of people are skeptical about its potential because digital currency is more fragile than physical currency. It’s not immune to hacking and cyber attacks, and in most cases, it has no physical form. With bitcoin smarter, you can get an in-depth understanding of the technology and how it works.
What would happen if bitcoin became the main currency across the globe?
1.Bitcoin Price:
Bitcoin’s price is currently around $23,810. Imagine if cryptocurrency became a global currency. The price of bitcoin has been growing so quickly that some people have worried about a bubble, but there are some things that can support its demand. For example, if bitcoin becomes much more convenient and easy to use, people’s demand for it may increase, and the price can grow further.
2.Bitcoin as Stock Market:
The value of assets in the U.S. stock market is currently $20 trillion, and bitcoin accounts for only 1.5% of it. If this percentage increases, bitcoin’s price will also increase with it. In the world today, there is approximately $500 billion invested in stocks, bonds, and currency markets every day, and we are talking about at least three times as much if bitcoin becomes a global currency.
3.Bitcoin as Currency Black Market:
As cryptocurrency gains popularity and acceptance in the world, a black market is bound to emerge. It will exist like the black market for drugs and other illegal goods that we see nowadays. It can operate like a parallel economy that is separate from the system and use it to provide anonymity. In many cases, people involved in illegal activities will choose bitcoin because it is stored in digital wallets but transferred using blockchain technology.
4.Bitcoin Accepted in More Places:
You can’t buy anything with bitcoin directly now. It depends on your country to accept it. Bitcoin is being accepted in some places, but only as payment for goods and services. In the future, you may be able to buy things directly with bitcoin like you can with all other online currencies such as Paypal and credit cards. You may pay for your tickets using bitcoin if a company accepts it as a form of payment.
5.Bitcoin Value Arbitrage:
As bitcoin becomes more widespread, converting fiat to bitcoin for a small fee will decrease. In the future, it may be very easy to make money by buying bitcoins and converting them back to fiat without having your own wallet full of bitcoins. People will be able to buy with their fiat currency and then sell at higher prices in other countries that accept it. It could be like major “money laundering” without the need for any cash or banking transactions.
Negative effects if bitcoin becomes the main currency in the world:
1.Decrease in Power:
If bitcoin becomes the main currency, it will decrease the power of central banks. Currency is issued by central banks in many countries, including yours. Unless there is a major breakthrough in technology, you can expect your national bank to lose all of its monetary power and become entirely obsolete, becoming just an office that pays you interest on the money you deposit.
2.Market Manipulation:
One of the biggest issues with bitcoin is price volatility. If it becomes a global currency, all types of market manipulation are likely to occur. This can affect prices directly, but it will also affect the price indirectly because the more people invest in bitcoin, the greater the demand for bitcoins will grow.
Conclusion:
The impact of bitcoin becoming a global currency has the potential to be huge and is difficult to predict. It also depends on how people respond to it. If people decide it is the next big thing, making them rich becomes relatively easy, bitcoin could increase dramatically in value and remain very volatile for a long time. On the other hand, if most people just decide to convert their bitcoins back into fiat and buy more fiat instead of holding on to bitcoin, this could cause a major crash in the value of bitcoin.
