As Bitcoin and its army of altcoins enter into the mainstream once again, the world starts wondering what the long-term implications may entail. While most people currently buy Bitcoin in hopes of making a profit, some forward-thinking economists see how the whole economic system could experience a massive shift towards a more democratic financial system.
This is exactly why we wrote this article. Over the next few paragraphs, we want to point out some of the important benefits of Bitcoin for the improvement and strengthening of the global economy. After reading this post, you will see much more than potential riches when thinking about the crypto industry.
The crypto markets are worth a little more than $400 billion dollars at the time of this writing. This is less than the total market cap of Tesla and not even half the value of Apple. By all means, the crypto markets are still in a price discovery stage, which explains why they are so volatile and unpredictable.
A trend we are slowly started to observe, however, is that the influence of the crypto markets tends to increase parallel to the economic instability. The more problems our current financial system is facing, the more “free” advertisement Bitcoin receives, which in turn helps the crypto markets grow. The trend is expected to continue in the next year, and we could see the price of popular cryptocurrencies increase rapidly.
Have you ever wondered why so many people choose to store their funds in Bitcoin to hedge against a potential economic collapse? If you are new to the markets you might find it strange given the large amount of volatility that could literally wipe off your yearly profits in a single day.
The reason is simple – Bitcoin is built to be a deflationary currency that increases in scarcity over time, which in turn increases its demand. More specifically, Bitcoin is:
Over the next few months, these benefits will become increasingly prevalent, given the inflation rates that will occur due to a large amount of money printing over the past few months.
What can you do with your money apart from spending it? Place it in a savings account in the bank? Sure, but did you know that this year both US and European banks cut interest rates to zero? Some even charge you annually to keep your savings in the bank. This is a zero-sum game that no one likes to play.
The innovative minds of the crypto space saw this and decided to increase the utility of cryptocurrencies to help users earn passive income and participate in different money-making events. For example, users can stake their funds and earn a considerable amount of cryptocurrency in return, store it in high-yield savings accounts, loan it to other users and gain interest, hold it in their wallet to earn benefits, and more.
One of the biggest benefits of the global economy is the ability to bring people together. When using cryptocurrency as a payment method, there are no borders, limitations, and waiting times. Users are able to transact with each other no matter where in the world they are, what day of the week it is, and what geopolitical limitations are imposed.
This benefit is obviously great for international trade, as transactions can clear easier, faster, and without any hassle. However, it also strengthens the economy in other ways, thanks to the availability and additional opportunities that it presents.
Newer cryptocurrencies incentivize users when making use of their coins or tokens. To explain this in simpler terms, the profit potential increases the more a cryptocurrency is used. While this may still be a concept in its early stage of testing, it could play a significant role in the rate of mainstream adoption.
Here’s an example. Cryptocurrency project SXP has created debit cards to allow more people to pay at POS terminals using crypto. Every time users pay with SXP tokens, a small percentage of their payments are “burned” forever. This means that the total supply decreases, which inherently increases the value of the remaining coins. By using the card more (and thus paying with crypto), the remaining tokens in the users’ wallets increase in value.