The bitcoin craze that hit the world in late 2017/early 2018 showed the world that cryptocurrencies are a force to be reckoned with. If this seemed like an experimental currency system or fad that won’t have any major impact, the whole commotion that it caused is surely a sign that this phenomenon is here to stay. Here are some ways cryptocurrencies have influenced today’s business world.
No exchange rate
If you ever had to deal with international trade, you know that going back and forth between countries and different currencies is a real pain in the neck. The exchange rate differences can take away a significant proportion of your profit. However, with a universal currency like bitcoin, there is no need for losing money on such trivial issues.
Fast, cheap and safe transactions
Even though we live in a time when banking has never been more convenient, it is still astounding how slow some transactions can go. The transactions often move through intermediary banks, each of them taking its time (and cut of the profit) to process your transaction, so you might end up waiting an entire week to get your money. Apart from that, the fees can sometimes be obnoxiously high. With cryptocurrencies, the transaction is more or less instantaneous and you can use your money in as little as 10 minutes. Other than that, there are no bank fees, so you get to keep all of your money. Finally, apart from being fast and convenient, crypto-payments are also really safe due to the complexity of the blockchain technology behind it, which creates clear and safe records that can always be verified.
Speaking of some negative consequences, the crypto market opened a whole new door of illegal activities on the internet. Since banks are not involved, the transactions are anonymous and are not traced, which means everything is fair game. Places like the Dark Web are treasure troves for people looking for illegal products ranging from drugs and weapons to child pornography. And of course, cryptocurrencies are an ideal way of payment for this kind of products. Other than that, cryptocurrencies are ideal for laundering money due to their untraceable character.
Another surprising negative consequence not just for the economy but for the world as a whole is the negative impact crypto had on the environment. With the advent of the rapid growth of the value of bitcoin, everybody started being into mining for bitcoin or other cryptocurrencies. Mining mostly required several GPUs being hooked together and left running for days in order to verify the cryptocurrency transactions. And of course, the energy expenditure for this is not low.
Having in mind that there were records of whole “mining farms”, huge hangars filled with bitcoin mining rigs, in developing countries with cheap electricity, you can only imagine how the electricity consumption, and consequently, the entire environment, was affected by this phenomenon.
Even though the cryptocurrency market is lately experiencing a decline in the value of individual currencies, it is only a matter of time when it will explode again. Therefore, this is something that we should keep an eye on in the future.