Bitcoin as the International Payment Solution
A little more than ten years have passed since a select group of cryptography specialists received notification from mysterious Satoshi Nakamoto. We are talking about the launch of the innovative monetary system Bitcoin. From that moment on, developers of cryptographic algorithms offered many alternatives to existing payment systems. Consumers and investors tested a number of digital currencies. Governments and central banks took a wide variety of approaches to regulating the crypto market with greater or lesser enthusiasm. However, there is an ongoing debate as to the essential nature of virtual assets. The more interesting question is “Is it possible to use crypto to create a global cybernetic financial system that completely replaces modern money mechanisms and financial intermediation?” Let’s find out.
Bitcoin is consistently touted as the eighth wonder of the world. It’s also a superstar on social media, hip, and in-demand. Media outlets routinely publish news about it. Users discuss crypto-related topics and the issuance of new coins on forums online. BTC has become an international payment instrument that is valid in every corner of the globe. It has every possibility of becoming a major international currency, available to everyone. What’s more, it is non-location-dependent. Biggies like Dell, Expedia, PayPal, Microsoft, some private clinics in Warsaw, and a Burger King franchisee in Russia already accept BTC payments. Eventually, the list will grow.
Due to the decentralization and high security of the network, hashcash is considered a specific and secure corridor for receiving or transporting money. Especially when it comes to international transfers. Receiving payments in digital gold is becoming a tradition for freelancers and remote employees. It’s reliable and anonymous.
Cryptocurrency is like the traditional financial system’s worst nightmare and users’ greatest fantasy all combined into one. Unlike classic currencies, which are generally accepted and legal, it has the following characteristics:
- The primary benefit here is the ability to reduce the cost of transactions and involve very large sections of the population in financial operations.
- Another strength is decentralization, meaning there is no one to control the network.
- Worldwide access. It makes participation in the system possible to any user connected to the web.
- Security. Cryptography protects the integrity of funds that give users virtually unlimited freedom of action.
- Transactions speed. Operations with crypto are much faster.
Not only is the payment system undergoing a digital transformation, but international trade is involved now as well. Blockchain saves money and time and doesn’t leave a messy paper trail. The groundbreaking technology prevents the possibility of data manipulation. This, in turn, minimizes corruption risks and guarantees the accuracy of the information, as well as allows you to track all interactions between customs authorities and carriers of goods.
Creating a single trading ecosystem means that all the advantages of distributed ledgers can be tested. In addition to a space for the instantaneous exchange of information and data processing, blockchain and smart contracts can be used to automate payments and determine taxes, as well as control supply and demand for a particular product.
The attitude towards magic Internet money varies from country to country. In Japan, BTC and its alternatives have been granted the status of a means of payment on an equal basis with yen since 2017. In the United States, they stipulate only issues related to taxation and cases with possible financing of terrorism. At the same time, the US regulators have doubts about providers of financial instruments based on BTC that are allowed to trade. South Africa has a very progressive attitude toward crypto. In particular, their government is already actively cooperating with blockchain companies. Authorities in Iran, in turn, are conducting research on the economic and infrastructure aspects of preparing to use Bitcoin in the country. According to the Minister of Information Technologies, measures are being taken to create infrastructure for the digital currency as soon as possible. Venezuelans have invested trillions in BTC. Despite some complications, we choose to believe that one day the world will come together through the power of Bitcoin.
If one is to believe Deutsche Bank, cryptocurrency will replace traditional money by 2030. High demand on dematerialized means of payment and anonymity will contribute to the spread of Internet money. A wide-scale introduction will encounter a series of obstacles though. The first of them is the legalization. This problem can be solved using partnerships with major companies. This way the assets will begin to appear on the mass market through, for example, mobile applications. Besides, you shouldn’t forget about the crypto industry’s dependence on electricity. As encrypted, digital assets spread, the need for mining will increase. Since electricity prices in different countries vary, the adoption of virtual coins will slow down.
So, to summarize, the anonymous and decentralized nature of participants in cryptosystems calls into question the importance of a two-tier banking system. One of the buzzwords of the 21st century opens the door to a digital hypermarket that knows no national borders. Today’s commission income of traditional payment system operators can be transformed into tomorrow’s consumption of hundreds of millions of new users of the digital economy. Paired with Big Data, cryptocurrency will enable high-tech elites to create a payment system independent of the state and influence the behavior of individual social groups, consumers, and voters. It’s just a matter of time.