WP4: (Rough Draft)
A cryptocurrency is 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. Known as a blockchain, this peer-to-peer network serves as a secure ledger of transactions and is monitored and organized. The problem that comes in hand with cryptocurrency is that it is not a capital that everyone can own. Cryptocurrency usage was most widespread in developed countries, which made other third-world countries unable to access the same sources of income and wealth as these developed countries. Cryptocurrency not being run by the government and correlated with banks makes it inaccessible to third-world countries. Thus to help solve this problem of economic insecurity globally, government officials need to help connect cryptocurrencies to banks so people in third world countries have an equal source of income and capital.
Cryptocurrencies were first invented in the late 1980s to send money untraceable 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 of people or individuals 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). The process of mining is what creates bitcoins. 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 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. 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 the money. Cryptocurrencies exist today in many different types; some have proven more stable than others but still have the potential to grow.
Locally in the U.S., “over the past five years, interest in cryptocurrencies surged by over 3000% in the U.S. Around 6% of the U.S. population now use or own crypto, and the trend is growing as many as a quarter of U.S. investors are now entrusting their money to the crypto market” (MIQ). The excitement of investing and the potential for high and long-term growth is one of the many reasons for the increased investment rate in the U.S. As more websites began to take cryptocurrency, the format’s popularity skyrocketed. Celebrities such as Elon Musk, Gwenyth Paltrow, and Bill Gates started to endorse the system, which became a viable alternative to traditional lending in times of crisis, such as the epidemic. In developed countries, cryptocurrency use was most prevalent in English-speaking countries, including the United States, the United Kingdom, Canada, South Africa, and Australia. Indian, Chinese, and Brazilian emerging economies were also heavy cryptocurrency users. Despite its enormous popularity, many governments have yet to regulate the bitcoin sector. As a result, investors are prone to various scams and frauds. One such threat is deceptive advertising, which can cause some investors to lose their hard-earned money.
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 the cryptocurrencies adhere to the five properties and three functions of money. 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. People not trusting bitcoin is a problem because the people run it, and when you take people out of the cryptocurrency world, it will plummet. Bitcoin has the ability to 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. Without cryptocurrency not being correlated or under the government’s permission, it is hard for third-world countries to do so. According to several governments that have banned them, cryptocurrencies are being used to route money to criminal sources. The spread of crypto might disrupt their financial systems.
The leading solution and positive step forward regarding third-world countries and cryptocurrency are making sure cryptocurrency is developed worldwide. A popular cryptocurrency application is “ensuring the ‘unbanked’ people can access banking solutions. But along with that, cryptocurrency is giving developing nations the chance to transact and grow small-scale businesses via mobile phone” (Komarraju). According to the Harvard Business Review, “cryptocurrencies, particularly when used in conjunction with smart contracts, can help to enhance societal trust and combat corruption by facilitating a more transparent contract system. In addition, citizens can monitor how governmental monies are used by using the publicly available record data of cryptocurrencies in the blockchain. It would also make it possible for governments to keep track of their spending.” The main barrier stopping cryptocurrency from being worldwide is economic insecurity, and one way to overcome that is by connecting cryptocurrencies to banks and through the government.
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. What does the problem and the positive step forward you’ve chosen reveal about some aspects of globalization? Through the element of globalization, I believe that social change is possible through the influence of other big countries and people making money escaping poverty. People will want to follow and do the same. When people of 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. An example of social change fluctuating cryptocurrency is “Social media and other media outlets can cause cryptocurrency price fluctuations, for better or for 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 could be a considerable possibility. “There is no doubt that cryptocurrency is a game changer,” stated Geers. “But in the near term, it will not replace the US dollar. 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 in order for it to be able 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 associated with banks, making it unavailable to underdeveloped nations; this leads to it not being a form of money that 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. Along these lines, to assist with taking care of this financial instability worldwide, 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. When able to globalize Cryptocurrency, it will enable some people in poor countries to escape poverty. This is due to the fact that bitcoin allows people to overcome obstacles such as a lack of or insufficient access to financial services and a lack of social trust.
Works Cited
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“All.” MiQ, 15 Feb. 2022, https://www.wearemiq.com/all/.
February 03, 2022 Courtney Lindwall. “Crypto Has a Climate Problem.” NRDC, 20 Apr. 2022, https://www.nrdc.org/stories/crypto-has-climate-problem.
Chu, Mike. “What Is the Point of Cryptocurrency? (4 Reasons Why You Should Care).” Data Overhaulers, 19 Mar. 2022, https://dataoverhaulers.com/purpose-point-of-cryptocurrency/.
“Cryptocurrencies Can Help Developing Countries with Financial Inclusion.” Artificial Intelligence, Big Data Analytics and Insight, 3 Sep. 2021, https://www.analyticsinsight.net/cryptocurrencies-can-help-developing-countries-with-financial-inclusion/.
NewsWatch. “The Impact of Crypto Currencies on Developing Countries.” NewsWatchTV, 23 June 2021, https://newswatchtv.com/2021/06/23/impact-crypto-currencies-developing-countries/.
“Explained: Why Some Countries Are Banning Crypto Advertisements.” cnbctv18.Com, 22 Jan. 2022, https://www.cnbctv18.com/cryptocurrency/explained-why-some-countries-are-banning-crypto-advertisements-12204442.htm.
Rubenking, Neil J. “Can Cryptocurrency Replace the US Dollar?” PCMAG, PCMag, 20 May 2021, https://www.pcmag.com/news/can-cryptocurrency-replace-the-us-dollar.
“How Cryptocurrency Improves Developing Countries.” BORGEN, 26 Aug. 2018, https://www.borgenmagazine.com/cryptocurrency-improves-developing-countries/#:~:text=Cryptocurrency%20continues%20to%20evolve%2C%20but%20it%20has%20already,time%20and%20offering%20greater%20financial%20inclusion%20and%20microfinancing.?msclkid=f6d9f695c0fd11ec8aecdcb2150f3501.
Staff, LeapRate. “Benefits of Cryptocurrency to the Third World.” LeapRate, 18 June 2021, https://www.leaprate.com/experts/adinah-brown/benefit-cryptocurrency-third-world/?msclkid=88cdd3cac0fd11ecb57b22e4d3b556b4.
