Bitcoin is one of the most popular type of cryptocurrencies to date, allowing two parties to share currency transactions digitally outside of the central banking system. Already, you may start to think of how and why Bitcoin can be beneficial on a general level; however, do you know just how influential it has been on the global economy? You can be the judge and decide for yourself if the following points are generally positive or negative.
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Potential for a stock market crash
Bitcoin’s worth is currently over $100 billion. For now, investors are interested in the idea of investing in Bitcoin. However, word is going around that all things – even Bitcoin – must come down with time. If and when something happens to Bitcoin, some believe it could impact the stock market so severely enough to cause a major crash.
The latter point seems like a complete exaggeration, but the thing is, Bitcoin and other cryptocurrencies have been gaining popularity at a rapid rate – especially within this past year. That said, the larger it grows, the greater it can fall, making more significant of an effect on the market.
Replacement of fiat currency
Bitcoin is still in the growing process and is nowhere near as powerful and popular as fiat currency. Still, with Bitcoin being seen an alternative to fiat currency, it has, many times, replaced such. But to say that Bitcoin is or will completely replace traditional currency is an overstatement at this rate.
For some, the idea of replacing fiat currency is viewed as a benefit as cryptocurrencies aren’t federally-operated. As a result, some believe Bitcoin has the power to essentially overtake central banking facilities’ control over the economy and ability to issue money – which may be a pro or a con depending on where you stand.
Bitcoin could also be a considered a benefit in that Bitcoins can be viewed as a national currency as different forms of cash can be exchanged.
An entry to the Dark Web
Because Bitcoin transactions are virtually anonymous and ambiguous, money can be transferred secretly. In turn, there can be a plethora of illegal transactions and trading of different currencies from country to country quickly and effortlessly.
But using the Dark Web for monetary exchange can also be a great in the sense that many countries around the world have distrustful central banking systems, leaving Bitcoin the more trustworthy and safer option in some cases, especially when it comes to corruption.
Easier avoidance of income tax
Because Bitcoin does not display the names of parties making transactions via its system, this means Bitcoin will surely attract dishonest individuals who refuse to file annual income taxes on money obtained through the platform. Plenty of financial secrets can be kept due to the anonymous structure of Bitcoin.
Making it even easier to avoid the responsibility of filing income tax, Bitcoin holders can receive their money online and quickly buy other things online (which is common as Bitcoin valuation rates fluctuate drastically), making it seem as if there is no need to report such income as it can be easy come, easy go.
Additionally, the confusion with how to report Bitcoins as income tax alone is stopping many from paying their taxes, even though there are many resources online instructing one how to file Bitcoin taxes or even accounting services for such.
Sales of illegal items
Here we are again with the ambiguity of Bitcoin. Not only are names kept private as we discussed, but what people sell or trade with others in exchange for Bitcoins can also be secretive. This means items can be illegally bartered from firearms to underaged or illegal sales of drugs.
For illegal products or services sold with Bitcoins, people can get away easier than if they paid with fiat currency due to the secrecy tied to Bitcoin.
Increase in scams, payment fraud, and identity theft
Also due to the subtle transactions able to be made with Bitcoin, it’s also clear to see that there would be an increase in scams from this source. Individuals can be harder to track down, making them believe they can get away with taking people’s money and running.
Even though individuals’ addresses are posted publicly when a Bitcoin transaction is made, there’s still significant privacy involved that make it significantly easier to scam and get away with it.
Considering that Bitcoin is apart of the Dark Web, a dangerous place, there is also potential for a greater risk of theft and fraud and no guarantee for protection.
New ways of purchasing products and services
With Bitcoins in the picture, some businesses have begun to accept them from customers as a form of payment, allowing for greater versatility in the market.
If those businesses report Bitcoin transactions as personal income tax, there would be a positive effect on the economy considering that with more types of currency accepted, the more consumers that can take part in putting more money back into the economy.
However, for the businesses that don’t report their Bitcoin earnings, this would clearly have a negative impact on the economy.
But considering that even larger retailers such as Overstock.com have jumped on the Bitcoin bandwagon, it’s believed that the opportunity to shop online more frequently with Bitcoin can do good things for the global economy.
Being a newer form of currency, Stanford does make a good point that one disadvantage to Bitcoin is that it is seldomly accepted among online merchants at this time – but it is making progress. As it gains further stability, security, and buyer protection, Bitcoin will even have greater potential.
Conclusion
Bitcoin has had an impact on the economy world-wide. It has benefits for many, but nevertheless, it isn’t without its cons. Bitcoin may not be replacing central banks anytime soon, but it has had considerable power in our world today despite only being around for since 2008. As it grows larger, we expect it to make an even larger impact on our world’s economy.
