Globalization of Cryptocurrency
Cryptocurrency is a new form of digital money designed to function as a currency through an online network that is not dependent on any organization, such as a bank or government, to maintain it. Currently, it is known as a blockchain and does not exist in any physical form, such as paper money, and only exists online. This peer-to-peer network serves as a secure ledger of transactions and is secured by cryptography, making it nearly impossible to duplicate. Today, Cryptocurrency is most widespread in developed countries, which shows the disparity that makes other third-world countries unable to access the same sources of income and wealth as these developed countries. Furthermore, Cryptocurrency is not being monitored or secured by any government entity, nor is it correlated to any banks. Thus to help solve this problem of global economic insecurity, government officials need to help connect cryptocurrencies to banks, so people in third world countries have an equal source of income and capital. If this were to happen, it would give the people of underdeveloped countries the freedom to rid themselves of their government corruption, provide financial transparency and help to close the gap between crime and poverty. Also, the essence of “cryptocurrency’s infrastructure is advantageous to developing countries, as it provides greater financial inclusion, a key factor in poverty reduction.” Cryptocurrencies were first used in the late eighties to send money that could not be traced and without the need for centralized entities. The American cryptographic expert David Chaum created an anonymous cryptocurrency called Digicash in 1995. In 2008, a group known as Satoshi Nakamoto invented the cryptocurrency Bitcoin. When its application was released as open-source software in 2009, the currency began to be used (Nigeria). Bitcoin is becoming increasingly popular with people hoping to send money overseas without being bothered by banks or governments. However, the rapid increase in its value has left some people wondering what they should do with it. Early in 2010, Bitcoin was the only Cryptocurrency on the market. The prices were only a few cents. New digital currencies entered the market throughout the following years, rising and falling along with Bitcoin’s price. As a result of the volatility during this period, many people lost faith in cryptos as an investment vehicle.
Nevertheless, the significant growth of cryptos began in late 2017. “All cryptocurrencies reached a market capitalization of $820 billion in January 2018 before crashing later in the month” (Nigeria). Despite this crash, the crypto market has shown steady growth. This stability will help grow this new currency in developing countries. Globally, the crypto market is thriving, and it’s only expected to grow in the future. With the digital economy growing exponentially, cryptocurrencies will contribute significantly to the end of money or an alternative means of payment.
The biggest hurdle that faces Cryptocurrency and the globalization of digital money in third-world countries is technology. Developing countries are still struggling to use technology daily and integrate it into their society. The integration of technology into their communities will provide economic growth and development, and they will be better connected to the world. Due to their lack of technology, these countries fail to be recognized and be considered legitimate players in the modern world. Technology will help create jobs and cause economic growth. Other limitations resulting from this action are terrorist groups and drug cartels using cryptography to smuggle contrabands, which negatively impacts society. In addition, anonymous Cryptocurrency can increase crime. Those who are digitally illiterate are being left behind as Cryptocurrency becomes increasingly accepted. A popular cryptocurrency theme is “ensuring the ‘unbanked’ people can access banking solutions,” with that, Cryptocurrency is giving developing nations the chance to transact and grow small-scale businesses via mobile phone” (Komarraju). While banks and financial institutions are taken for granted in established countries, the reality is that over two billion people do not have access to stable and regulated banks. With its simple framework, Cryptocurrency can give access to the masses through a cell phone. Cell phones have become commonplace in developing countries, and that technology can close the gap between poverty and banking. According to the Harvard Business Review, “cryptocurrencies, particularly when used in conjunction with smart [phones], can help to enhance societal trust and combat corruption by facilitating a more transparent contract system.” Mobile phones and Cryptocurrency can level the playing field between the impoverished and the world.
A barrier stopping Cryptocurrency from being used worldwide is economic insecurity, and one way to overcome that is by connecting cryptocurrencies to banks and through the government. Despite its enormous popularity, many governments have yet to regulate the bitcoin sector. Right now, most cryptocurrencies remain unsustainable as financial assets under the U.S. government due to “their prices are frequently manipulated, market participants are too often defrauded or simply exploited, assets are stolen outright, and taxes owed are often not reported, let alone paid,” says a recent report on crypto regulation from the Center of American Progress. The main point of Cryptocurrency is to “fix the problems of traditional currencies by putting the power and responsibility in the currency holders’ hands. All cryptocurrencies must adhere to the five properties and three functions of money if they want to be considered legitimate. They each also attempt to solve one or more real-world problems” (Chu). The government’s power not within their hands is due to it not having a trackable record because it is not correlated to the government, making it not trustable. The leading solution and positive step forward regarding third-world countries and Cryptocurrency is making sure Cryptocurrency is stable and trustworthy. People not trusting bitcoin is a problem because it will plummet when you take the trust out of the cryptocurrency world. The key to the globalization of Cryptocurrency is trust. Bitcoin can aid underdeveloped countries by boosting financial services access and solving societal trust concerns. In essence, some people see Bitcoin as a means of assisting third-world countries in their economic development.
Another factor why Cryptocurrency is so necessary to these developing countries is political unrest. In 2018 Bitcoin reached a milestone when it was valued at $10,000, but the exciting thing was that it hit $14,000 in Zimbabwe. This milestone was significant to third-world countries like the Philippines because it displays the benefits cryptocurrency can have on developing countries. The price of Bitcoin increased due to a political crisis that caused the people of the Philippines to lose faith in their country’s government. It “created economic turmoil, which caused people to look for a more secure method to protect their assets” (Ventura). These actions led them to try Cryptocurrency, which they felt was safer than their traditional currency. In communist China, they “turned to cryptocurrencies because of Chinese government policies, people of third world countries need a haven to protect themselves from hyperinflation, government seizure of assets,[and]massive devaluation in traditional currency.” These two examples show the value of cryptocurrencies and developing countries because it allows them to control and protect their assets and enables “equal access to currency solutions for everyone” (Leperate Staff).
Globalization is linked to massive and rapid human change. The flow of people from rural to urban regions has quickened, and the rise of cities in developing countries, in particular, is connected to many people living in inadequate conditions. Family discord, as well as societal and domestic violence, are on the rise. Through the element of globalization, I believe that social change is possible through the influence of other big countries, and people making money is a means to escape poverty. When the uneducated and impoverished see success and financial stability, they will want to follow and do the same. When third-world countries start to become aware of the long and short-term money being made from Cryptocurrency, it will be a significant phenomenon. It will be used as a currency globally. The rise of social media has played a role in promoting digital money. With over a billion people in third world countries using social media, its reach is the most significant way to build trust and show the success of Cryptocurrency. An example of social change fluctuating Cryptocurrency is “Social media and other media outlets can cause cryptocurrency price fluctuations, for better or worse. Trending news about a large digital currency exchange hack can cause a significant drop in digital currency value. For example, when Hong Kong-based exchange Bitfinex was hacked, Bitcoin value dropped 20 percent” (CNBCTV18.com).
Do I think that it will overtake paper money currency? Not anytime soon in the future. “There is no doubt that cryptocurrency is a game-changer,” stated Geers. “But it will not replace the U.S. dollar in the near term. In the long term, anything is possible, but expect government resistance” (Rubenking). This would be an example of the government taking control of Cryptocurrency and making it a part of banks for it to be spread globally. If we were to promote bitcoin and other cryptocurrencies worldwide on social media, this would lead to social change and globalization of Cryptocurrency.
Cryptocurrency is not controlled by the public authority and is not associated with banks. This leads to it not being a form of money anyone can own. Cryptocurrency use was mainly prevalent in affluent countries, limiting third-world countries’ access to the same source of income and capital as developed countries. While it will not replace physical money in developed countries, the opportunity for growth in third-world countries is exciting because of their lack of access to financial institutions and corrupt governments. This will give power to the people with financial stability along these lines. Government authorities need to help with interfacing digital forms of money with banks. Hence, individuals in underdeveloped nations have an equivalent type of revenue and capital. Globalization can be achieved through social change and the influence of other large countries and those who make money to get out of poverty. People will desire to follow in other people’s footsteps and emulate their actions leading to the spread of Cryptocurrency worldwide. Globalizing Cryptocurrency will enable some people in emerging countries to escape poverty. This is because bitcoin allows people to overcome obstacles such as a lack of or insufficient access to financial services and a lack of social trust. The globalization of Cryptocurrency will help lead to the income of capital and income becoming more of an even field throughout the world.
Works Cited
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