An investment into Bitcoin (the largest and best-known cryptocurrency) ten years ago would have given an ROI of tens of thousands of percentages, making it the best performing asset in history.
While cryptocurrency has done a lot in its first few years, many experts believe that its biggest impact to the global economy is just beginning today. Learn about some of the ways that the crypto economy is set to change the world in the coming years.
Streamlining International Currency Transfers
Trillions of dollars are sent and received across international boarders each year. Using the current systems, this process is costly and time consuming.
Services like Western Union, banks, and credit unions have to charge relatively large fees to facilitate these types of transactions. Since cryptocurrency is not impacted by national boarders, funds can be sent and received almost instantly and with virtually no cost.
This is a feature that is already being tested by many financial institutions and used regularly between individual people. The streamlining of international currency transfers will have a dramatic impact on both major corporations and the poorest citizens in the world.
Having the ability to send and receive money without obstacles will be a game changer for billions of people around the world.
Protection Against Hyperinflation
Never before in human history have global governments 'printed' so much new currency. As governments insert new money into the market, it will contribute to inflation.
When properly managed, inflation is not always a bad thing. As the world has seen in many cases before, however, this process can sometimes get out of control, resulting in hyperinflation.
The fact that most cryptocurrencies (most notably, Bitcoin) have a hard limit of how many coins will ever be created, and how frequently, there is no risk of hyperinflation from occurring with these assets.
Traditionally, people would purchase gold, silver, and other precious metals as a hedge against inflation. While effective, holding physical gold is often not very convenient. While carrying a small amount of it is easy, it can become impractical quite quickly.
Of course, the volatility in the current cryptocurrency market is reason for skepticism at this time. In the coming years, however, many people expect there to be far less volatility, making it an excellent way to reduce exposure to massive inflation.
Truly Anonymous Digital Transactions
In the earlier days of cryptocurrency, this was one of the biggest reasons why people would use Bitcoin. At that time, people could purchase things like drugs, weapons, and other black-market items using crypto so that it was much more difficult to track. While that type of thing still goes on today, the more exciting aspect of this is with the general 'gray-market' that virtually everyone takes part in.
Billions of people around the world buy and sell goods and services through Craigslist, Facebook Marketplace, and many other platforms. Many more will do jobs and get paid 'under the table' to minimize their tax burden. Paying in cash is common, but comes with its own inherent risks.
Using cryptocurrency is becoming increasingly popular because it has the anonymity (and tax avoidance) of cash, but without having to have the physical bills in hand.
What is Holding the Crypto Economy Back?
The above areas are just some of the most significant ways that cryptocurrency has the potential to become a major economic player. While a lot has been done up to this point, there are still some obstacles that are keeping cryptocurrencies from gaining wide-spread adoption. These issues include:
• Price Volatility - It is not uncommon for the price of a given crypto to swing 25+% in just a couple of hours, and significantly more on certain days. This type of extreme volatility can make many people hesitant to get involved.
• Difficulty of Use - While there has been significant progress in this area, cryptocurrency still isn't as easy to use as a credit or debit card. Until the crypto industry can make it as simple to use as other payment methods, it will be difficult to get most people to use it.
• Number of Cryptocurrencies - There are hundreds of cryptocurrencies, with new ones being created regularly. While this can help to drive innovation, it also adds confusion for those who aren't actively working with these technologies.
Fortunately, there are various projects and efforts being made to address the above-mentioned issues.
Today, for example, many people are able to purchase certain cryptocurrencies such as Bitcoin and Ethereum just as easily as they would a traditional share of stock.
In the next few years, it is likely that the global use of cryptocurrencies will dramatically increase, which will later be seen as the true beginning of the crypto economy.
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