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IMPACT OF CRYPTOCURRENCIES ON THE ECONOMY

Cryptocurrencies have led to the emergence of a new market. Currencies like Bitcoin and Ethereum and many others have opened gates for a new kind of market which unlike the present money market is controlled by no one. In near days, cyberspace will rise up more like the managing body that will handle and maintain such disruptive markets.

Cryptocurrencies are disruptive economic innovations that have the potential to revolutionise the current economic structure and change how banks and financial institutions operate. Bitcoin is the most popular form of cryptocurrency that enables digital transactions between two parties without the need for an intermediary. Every transaction is digitally recorded in blocks that act like ledgers and once a block is filled a new block is created. All blocks are connected to each other using hashtags and a linear chronological sequence of these blocks forms a blockchain. Thus, every trans-action is digitally recorded to keep security at a top-notch level. Though the transactions are record-ed, the information of the parties participating in the exchange is not revealed. The money can only be tracked when it is converted into cash. This public way of managing transactions has created the possibility of a huge revolution in the banking sector across the world. The economic power which lies with the governments and financial institutions is at stake which has made them wary of crypto-currencies.

All the monetary transactions were enabled through central banks. Now, with the evolution of cryp-tocurrency, the scenario has changed. The power that was vested to the governments and central banks is shifting to the masses. This revolutionary change in transaction handling has the power to change the economic structure. To bring security and enable scrutiny, central banks and financial institutions maintain a record of all the transactions undertaken by the people. Now with digital cur-rencies, this economic power can be challenged by people. This has led to the creation of a new au-tonomous body that can facilitate transactions. Ultimately if adopted on a large scale, Bitcoins can lead to the politicisation of money also There have been implications that Bitcoins can be used to secretly launder money outside the country. Central banks across the world have been wary of Bitcoins as an uncontrollable and unpredictable form of currency. Cryptocurrencies are leading to loopholes in the current bank’s data about the money transactions leading to the inability to track economic activities. Crypto and Cyberspace has emerged as a power in themselves thus bringing a check on the activities of the so powerful governments.

Cryptocurrencies have led to the emergence of a new market. Currencies like Bitcoin and Ethereum and many others have opened gates for a new kind of market which unlike the present money mar-ket is controlled by no one. In near days, Cyberspace will rise up more like the managing body that will handle and maintain such disruptive markets. It is pertinent to note that the near-zero transac-tion cost has made these currencies even superior to the traditional money we are accustomed to us-ing. What can be surely stated is that it is just the beginning and the number of possibilities is end-less in future.

The writer is an economist and advocate.

All the monetary transactions were enabled through central banks. Now, with the evolution of cryptocurrency, the scenario has changed. The power that was vested to the governments and central banks is shifting to the masses.

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