How is cryptocurrency and blockchain technology going to evolve the world’s economy?
Cryptocurrency and blockchain will definitely play a big role in the way we exchange and share goods and services globally. Its important to note that the first use case of the blockchain was the exchange of value over the internet through the use of Bitcoin. Typically, we use companies like PayPal and Western Union to carry out these type of transactions, which usually involves paying high fees and abiding by their centralized rules and regulations. Wether we agreed to them or not, there was no better way of do these transactions, so we complied. But now, Bitcoin has proven that it is possible to securely transfer value, nationally or internationally, over the internet at extremely low fees without a middle man - just person to person.
Today, thanks to the exponential growth of the cryptocurrency space, Bitcoin is no longer the only use case of blockchain technology; as there is now over 1700 cryptocurrencies and hundreds of new use cases. Cryptocurrencies themselves are evolving and they are able to do so much more than what bitcoin can do. The main problems that bitcoin has, such as scaling and slow transaction speed relative to more establish means of money transfer like Visa, are all being solved with the latest cryptocurrencies. Third generation cryptocurrencies such as EOS and Cardano (ADA) can do much more than money transfer primarily through a new transaction method called Smart Contract. These are just examples of how cryptocurrency and the blockchain is evolving and because of how intertwined they are with the economy, the economy will be evolving also. Lets take a look at how various areas of the world economy, such as Government, Employment, Energy, Cross-border Transactions, Business and Transportation, will evolve with cryptocurrency and blockchain.
Government
Why would we need the government when we have cryptocurrency and blockchain?
"Cryptocurrency is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. That lack of central authority is the primary reason governments are afraid of the cryptocurrency." source: investopedia.We have heard countless causes of government corruption and misuse or abuse of power; what if we could design a digital form of government that follows all the rules on a trustless network, where everyones vote count and cannot me manipulated? This is possible on the blockchain, and examples of these are already out there with blockchains such as EOS and Cardano (ADA). These networks have fully decentralized governance and cannot be manipulated by its creator or users.
Employment
With nearly everything going digital, a lot of work is being done in the digital space by workers that are not getting paid. In some cases, they are not getting paid simply because its difficult to track, record and allocate pay accurately. The BCG Henderson Institute, a forward thinking multinational consultation firm since 1963, has recently reported that
"the strategies for generating jobs and prosperity in the past are no longer sufficient to deliver inclusive prosperity to economies around the world. The already significant impact of digital technologies and rising economic nationalism is further magnified by profound societal changes as the world’s population becomes even more connected, more mobile, and more aware of global trends."Cryptocurrency and blockchain technology will help to securely track, record and allocate pay accurately for the digital work.
Cryptocurrency has also made it easier to transfer money internationally and at a cheaper rate in comparison to the more popular platforms like Western Union. This has further opened the doors for international work, where the employer and employee does not have to live in the same country to interact professionally. Blockchain technology is also providing millions new jobs that didn't exist prior to the 2009 when bitcoin was introduced to the world. Various blockchain programming jobs, cryptocurrency mining jobs, jobs created from the involvement of organisations in the blockchain revolution and jobs associated with Decentralized Automated Organizations (DAO), are a few examples such professional vacancies.
Energy
The consumption of energy continues to rise on year to year basis. According to the an article published on the U.S. Energy Information Administration website in September 2017, world energy use is projected to increase by 28% in just over 20 years.
Source:U.S. Energy Information Administration
Cryptocurrencies, like bitcoin, that use mining to validate transactions will also be adding to that energy consumption increase; however, there is now a new trend in cryptocurrencies, where the latest group of cryptocurrencies are using a new validation method called Proof-Of-Stake, which required zero energy consumption. We also see the emergence of cryptocurrencies like SolarCoin which is a cryptocurrency that supports renewable energy by issuance of SolarCoin to solar energy users. Another cryptocurrency promoting a more sustainable model of energy is GENERcoin. The GENERcoin team believes that:
"The world is shifting to a sustainable model of energy both for it's viability and out of necessity and GENERcoin will serve to promote and assist this vital inititive. The value of GENERcoin is represented by the deliverable energy it is backed by, which can be more stable than debt assets which may be devalued due to inflation."Cross-Border Transactions
It has always been cheaper and more affordable to transfer value within a country than to transfer that value across international borders. This is because there is usually an increase in taxes and also the middle man, such as Western Union, will require a payment fee for the use of their service. The cost of this will be reduced drastically through the use of cryptocurrency and blockchain technology, as the first use case of cryptocurrency is the secure transfer of value locally and internationally at a much cheaper rate and without the need for a middle man. Value transfer is done from one private-owned wallet to the next, and it only takes a fraction of a second.
Business
Cryptocurrency and blockchain will change the banking system in a big way. With cryptocurrencies, like bitcoin, you can store your money in your own personal wallet. There will be:
- no need to inform your bank every time your want to make a withdrawal or deposit;
- no limit to the amount of money you wish to transact or the quantity of transactions per day;
- no need to excessively provide identification to use your own money;
- and no need to pay extremely high fees for each transaction made.
Without the need for a middleman, the price of goods and services will fall rapidly. Goods will become more abundant and that will also decrease their value. Peer-to-peer and country-to-country business interaction will increase, as interaction on the blockchain is trustless and secure; this will boost the economy of many country and give enemy states a chance to mutually coexist without lingering distrustful politics. The blockchain has also provided the platform for small businesses and start ups to raise funding through Intitial Coin Offering (ICO). It has also given low income people a change to invest and trade through cryptocurrency exchanges like Coinbase, Bitfinex, Bittrex, Poloniex and Binance.
Transportation
As the complexity of transportation increases with self-driving cars and peer-to-peer ridesharing companies, the typical methods of transportation payment become inadequate. Not very long from now, commuting will involve many different service providers and payment platforms. According to a recent Business Insider article:
"Consumers could use the cryptocurrency value on their card to pay for multi-modal transportation, enabling them, for instance, to take a trip part way on mass transit and part way on a bike-sharing or ride-hailing platform, and pay for the whole trip with one transaction on one card."Uber, the currency leader in peer-to-peer ridesharing, has taken the initiative to launch there own cryptocurrency known as Eco. Eco is an attempt to ensure that Uber is ahead in the use of cryptocurrency and blockchain technology.
The transportation industry will also be affected by the rise of Artificial Intelligence (AI) use cases in self-driving cars; however, if the AI is centralized, this presents the opportunity for hackers to hack in the AI and potentially wreak havoc on the transportation system. There is a solution to this: if the AI is designed on the blockchian, it will be decentralized, and as such, be almost impossible to hack. As a side note, lets not forget that transportation also refers to the transportation of goods, both locally and internationally. Electric car maker, Tesla, already has its Semi Electric Self-Driving Trucks. These trucks will be transporting goods all over the globe.
Cryptocurrency and blockchain will be strongly involved in the evolution of the world economy, and the changes are closer than you think. Japan has already fully adapted cryptocurrency and many other nations are following very close behind. Here is a chart showing the legal status of bitcoin globally:
source: wikipedia
How do you think cryptocurrency and blockchain will affect the world economy? leave your comments below.
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