What is the economic impact of cryptocurrencies?
What is the impact of cryptocurrencies on the economy?
Cryptocurrency is far more than just a financial innovation — it’s a social, cultural and technological form of progress. Through its accessible character, cryptocurrencies have the potential to spur the economy immensely.
Cryptocurrencies are digital assets managed with cryptographic algorithms. There are different types of cryptocurrencies. Bitcoin (BTC) is probably the most well-known cryptocurrency, but thousands of others have emerged over time. Naturally, these also include stablecoins, cryptocurrencies whose value is pegged to, for example, a fiat currency, debt paper or commodities like gold.
When cryptocurrency prices are correcting and the fear and greed index bounces, it is important to take a breath and grasp that the wider impact of cryptocurrencies goes beyond daily price fluctuations. Cryptocurrency use cases and their underlying blockchain technologies are being developed at an exponential speed. The tremendous economic impact of cryptocurrencies on the global economy cuts through sectors across national boundaries and goes beyond what was impossible not that long ago.
Cryptocurrencies have pros and cons, like any tool or technology. The positive impacts of cryptocurrency are profound. One of the greatest advantages is arguably accessibility. With cryptocurrencies, one can pay or get paid without the intervention of third parties such as banks. The status quo of the current financial system has arguably failed many individuals globally. Indeed, more than 1.7 billion people don’t have bank accounts.
Due to their accessibility, cryptocurrencies may spur financial inclusion globally. For underserved and unbanked populations — one billion of whom have mobile phones — the use of cryptocurrencies offers a shot at financial inclusion. Therefore it can be argued that cryptocurrencies are inherently good for the economy.
How does crypto protect from inflation?
The answer to whether cryptocurrencies and specifically BTC, protect from inflation may depend on your stance. Some may choose to only involve themselves with well-backed stablecoins.
Cryptocurrencies like BTC have traditionally been considered hedges against inflation. The capped supply of BTC and its decentralized nature have been believed to contribute to the increasing value of readily available BTC and those yet to be mined over time.
Falling cryptocurrency prices and high inflation rates today may make some wonder whether BTC delivers to the high expectations of
