Around our sophomore year of high school, a company called Bitcoin blew up. At one time, very few people thought Bitcoin would ever make a serious impact on let alone the economy but the world. It was mainly viewed as a hobby or a "dream" rather than a real investment opportunity. However, because of its popularity in 2017, stories have changed.
Bitcoin has impacted in economy in many different ways. For example, it eliminated the need for middlemen in financial transactions. One of the main features of Bitcoin is that it does not require an intermediary, like traditional currency does. Meaning, rather than a bank or central institution watching over transactions, bitcoin manages the transactions themselves. This worried banks, because it eliminates the needs for their services.
It also removes barriers to entry. "Cryptocurrencies" have enabled citizens like entrepreneurs to invest in business ventures. Rather than convincing banks to invest in their projects, they an use Bitcoin. As you can guess, this totally complicates regulation. Companies like Bitcoin is potentially a huge challenge to regulate due to their structure. A currency company similar to Bitcoin, called Silk Road, created a massive "black-market" where users could buy illegal items without consequence. Luckily the FBI shut it down, but it does not stop new potential companies to do the same.
Although Bitcoin has ultimately crashed, according to the stock market, cryptocurrency companies are in the end, dangerous. Being more vulnerable to cyberthreats, online fraud, and a system that could be shut down, you are better off investing in stocks that are wired around real U.S. dollars.
Bitcoin, or anything in modern technology that can eliminate human labor will certainly impact the economy. Like the example of the elimination of bank services, many machines are developed to remove human labor and increase efficiency for example factories which have eliminated the majority of the need for human labor as of relatively recently.
ReplyDeleteOne of the main problems with Bitcoin was its instability as a currency. It was extremely volatile and could swing widely with speculation. Cryptocurrency could become very beneficial if it was stabilized and secured properly.
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