Over the past few years, Bitcoins have been gaining significant importance around the world. Indeed, it is the world’s leading crypto-currency and the year’s best-performing currency. It has gained a staggering 35 percent across last year. Achieving this recognition has not been easy. Its association with crime, that is, the money laundering and narcotics through the infamous online black markets like Silk Road & Alphabay, and the alarming amount of price volatility left regular financial-market participants wary due to its potential risks.
Effect of Bitcoin on Banks and Industries
The potential impact of the digital currency on the central banking should not be taken lightly. The Bank for International Settlements (BIS), jointly owned by the world’s leading central banks, noted in November that bitcoin could interrupt the ability of central banks to exert control over the economy, as well as issuing money.
As of now, many central banks are closely observing developments in the growth of bitcoin. Many others, however, have already responded by sending out proposals for the issuance of a digital version of their fiat currencies. The central banks of Canada and Ecuador are a few among the first to explore such opportunities.
In recent years, the influence of Bitcoin has brought change to variety of industries.
Industries that have begun to accept Bitcoin as payment are mostly online companies themselves. The company Cheapname, that provide services which involve domain name registry, is accepting bitcoins as a mode of payment. Other digital companies like WordPress, which provides resources to set up professional and private blogs accept bitcoins. The company Steam — is a computer game distributor and a general gaming platform — accepts these currencies too.
The success has even brought Bitcoin from the digital realm to the real world. A founder with a well-documented penchant for R&D and all things state-of-the-art, it is sort of predictable that Virgin Galactic accepts bitcoin as a payment method. The same also holds true for a car company — Tesla and its founder- Elon Musk, which accepts Bitcoins.
Bitcoin’s Political Impact
Bitcoins bring with themselves a good amount of political controversy. This is because no single government can entirely control them. They are an explicit form of wealth for individuals alone, and no state can expropriate that because of the cryptography that they are built on top of.
Now, people are gradually coming to understand that cryptocurrencies are better forms of money because they are governed by code alone, making them a digital sacrosanct contract.
The effect of virtual currencies on society hasn’t been fully realized yet and will not be felt either immediately. Despite the generation of virtual currency, it has barely managed to reach the surface of the mainstream society. Most people still are yet to hear about Bitcoin and how virtual currencies work.
But a large number of vendors are now beginning to pick up bitcoins for payments. And it’s only a matter of time until many more of them follow the suit.
Bitcoins effect on the global future
Today, typically almost every digital and international transaction involves use of one form or another of virtual currencies or credit.
Hence, bitcoin is designed to provide the same security guarantees and the convenience of credit while foregoing its extra processing times and fees.
The arena with the biggest potential for bitcoin all around the world is probably international remittances — that is, money sent home by workers who are earning abroad. Right now, this money has to be handled by several intermediaries including banks, wire services, and other currency exchanges. A recent report study by Businessweek showed that the average fee paid for remittance services was 9% of the money transferred, with conversion to cash often costing an extra 5 percent. Western Union’s profit margins for intermediation are huge at almost 16%, and most of its costs are due to the technologies involved in moving money from one place to another, guaranteeing the legitimacy of the transaction. In brief, Western Union expends in billions just to do what Bitcoin can do or does for free.
With the increase in acceptance of Bitcoins across various industries, its impact is only likely to increase.
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