Cryptocurrency can be a digital or a virtual payment method protected by encryption, making counterfeiting or double-spending practically impossible. Its system allows for secure online payments. The term “cryptocurrency” derives from the data encryption used only to safeguard networks, such as elliptical curve encryption, public-private key pairs, and hashing functions. Many cryptocurrencies are independent blockchain technology-based networks. Blockchains are organizational mechanisms for preserving the integrity of data records. Cryptocurrencies are distinguished because they are typically not manipulated or issued by any authority.
This confirms the point of view of Mr Dan Oiknine that: “The defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.”
In fact, so many experts predict that Blockchain and associated technologies will significantly impact many areas, including banking and law. By going back to history, in 1983, the American cryptographer David Chaum has invented his first anonymous cryptographic electronic money known as ecash. In 1995, he decided to implement it through Digicash, an early type of cryptographic digital payments that needed user software to extract notes from a bank and select only specific encrypted keys before sending them to a receiver. In 1996, the National Security Agency released a paper about the Cryptography of Anonymous Electronic Cash. It was first detailed on an MIT email list and later, it was added in the American Law Review in 1997. Afterwards, in 1998 the bit-gold was described by Nick Szabo and is also described as an electronic currency system.
Bitcoin, the first decentralized Cryptocurrency, was founded in 2009 by a supposedly unknown inventor named Satoshi Nakamoto. Later on, they invented new cryptocurrencies payments, namely Namecoin, Litecoin, Peercoin etc. Since about August 2021, about 18.8 million bitcoins have been in use, with a cumulative market worth, with the figure constantly increasing. Interestingly, there are only 21 million bitcoins in circulation, avoiding both inflation and misuse.
The impact and results
According to Mr Dan Oiknine: “Cryptocurrency (and specifically, Bitcoin) operates peer-to-peer and without the authority of banks, allowing people to directly pay and receive payments without third party intervention.” Statistics have shown that more than 2,000 cryptocurrencies have existed since around January 2020. Moreover, about 36.5 million individuals in the United States possess different types of cryptocurrencies. Generally, experts believe that Bitcoin will be “digital gold”. It is like “precious metals”. It can preserve its value without the threat of devaluation. Many economical impacts of Cryptocurrency has been manifested such as:
Economical impact of Cryptocurrency by using the Blockchain
Blockchain, the technology involved in cryptocurrencies, is gradually making its way into the Various experts estimate that implementing this innovation in other sectors might unlock a lot of money and investments. This technology influence the business processes in a variety of industries. For example, the Blockchain has enhanced cross-border payments for financial organizations. Another critical aspect of blockchain usage in industries is implementing cloud services to perform intelligent contracts and protect against hackers. Furthermore, Blockchain may be used in government and public information to save bureaucracy and corruption while enhancing transparency.
Economical impact on the job market
The development of cryptocurrencies has spawned an entire business devoted to overseeing cryptocurrency trades worldwide. Intrestingly, the number of employees in the Blockchain business climbed slightly from 1,000 in 2016 to over 4,000 in 2017. One of the most highly searched professions in the bitcoin business has been software developers. Since the employment economy has shifted in recent years, the interest in these fields has remained strong. With time, bitcoin becomes more legal, expecting more significant worldwide investments and job growth in the sector is predicted.
Cryptocurrency’s Economic Impact Due to Low Transaction Costs
Most of the cryptocurrency users’ transaction charges are negligible to non- existent. Since cryptocurrencies and Blockchain are autonomous and do not necessitate the purchase of tangible property, users are not required to account for any additional expenses. The nominal transaction fees also foster trust in the cryptocurrency system, resulting in increased financial instruments, transactions, and a more connected world economy.
Cryptocurrency’s Economic Impact on Entrepreneurs
Including its decentralized structure, Bitcoin is a worldwide currency in which all individuals trade money despite nationality. That’s why it is especially significant for businesses that no longer have a national audience but rather an international one with whom payments may be transferred without the inconveniences of currency rates and international legislation. In an increasingly digital world, the social urge to interact across boundaries is now showing itself in financial requirements, which banking institutions cannot meet as effectively as cryptocurrencies. Entrepreneurs may help in the opportunity to invest, save, and move money across borders over time, therefore rethinking global business operations.
Identifying the benefits and drawbacks of cryptocurrencies
Digital currencies are acquiring an advantage over others as a result of industrialization and technological participation. However, these updated digital currencies have advantages as well as disadvantages. Mr Dan Oiknine mentioned that the cryptocurrency “its peer-to-peer focus that removes intermediaries and its pseudonymous design that eliminates the need for identification information for both parties.” In contrast, it also has many disadvantages like “high volatility and potential for large losses, black market activity, lack of regulation and backing.”
This digital payment has several advantages, mainly the protection from inflation, because inflation has led several currencies to lose value over time. Therefore, Almost every Cryptocurrency is introduced with a predetermined quantity at the moment of its inception. Furthermore, it can be Self-governed and managed. The currency exchange can be done quickly and is very secure and private.
On the other hand, cryptocurrencies transactions might be illegal. Since these transactions and payments are highly secured, the government cannot easily track down any user. If the personal data or the private key to the wallet get lost, it would be impossible to bring back the number of coins locked inside. Finally, the fact that Cryptocurrency is decentralized is actual. However, the movement and amount of various currencies are still under the control of their inventors and specific organizations.