Bitcoin (BTC) continues to revolutionize the economy, experiencing rapid growth but also raising various concerns.
This January marks 15 years since the launch of Bitcoin (BTC), the most popular cryptocurrency today, developed by the anonymous “Satoshi Nakamoto.” This popular cryptocurrency uses Blockchain technology to boost the security of digital assets, without the need for a traditional banking institution, allowing people to pay and receive payments instantly without the intervention of third parties.
Furthermore, as we move towards a more digital life and as technology becomes more and more part of the daily routine, it is necessary to start asking ourselves about the role of Bitcoin in everyday life and whether it will help or hinder the progress of the Global economy.
Below are some of the positive impacts and repercussions that Bitcoin has had on the global economy.
Electronic Payments and a Safe Haven Asset
Transactions through Blockchain technology are characterized by being fast, transparent, anonymous and secure, positioning them above traditional banking transactions. Additionally, transaction fees are sometimes much more affordable than conventional payment systems such as credit or debit cards.
As a reference to this, there is the “Lightning Network”, a layer 2 payment solution built on the Bitcoin network, which offers rates of up to 0.0029% per transaction, almost 1,000 times cheaper than popular payment platforms. such as Mastercard or Visa.
On the other hand, Bitcoin is currently used as a safe haven asset. This is because no one can control or manipulate the supply or demand of tokens, which gives it an advantage over traditional currencies, which can suffer from inflation, devaluation or confiscation.
Bitcoin Drives Global Financial Inclusion
Especially in developing countries, cryptocurrencies and specifically Bitcoin, could help acquire resources and provide new financial services due to their ease of rapid access, accelerating the economic and social development of the global economy.
A reference is El Salvador, which, in September 2021, adopted Bitcoin as an official currency, allowing the entire economic sector and citizens to benefit from the payment alternatives provided by Blockchain technology. Another important factor that drove the adoption of Bitcoin in El Salvador was the speed with which remittances can be sent from abroad through the “Lightning Network.”
In addition, the Salvadoran government also began to acquire BTC to boost its economy. To date, El Salvador has 2,800 BTC, valued at more than $130 million dollars, according to the current price.
Environmental Concerns, Regulatory Challenges and Instability
Despite the benefits that Bitcoin could bring to the global market, there are also strong concerns regarding BTC miners and the increasing regulation of the crypto space.
According to the Cambridge University Bitcoin Electricity Consumption Index (CBECI), it was estimated that energy consumption during 2022 from BTC crypto mining was 95.5 TWh, representing a serious environmental risk for the planet.
On the other hand, thousands of people fear that the price of Bitcoin is extremely volatile, meaning that it can rise or fall significantly in a short period of time. This can pose a risk to investors as they could lose their investments if the price of Bitcoin plummets.
Bitcoin has also been used for illicit activities, such as money laundering and drug trafficking. This has damaged the reputation of cryptocurrencies for years and has partly hindered their widespread adoption.
Bitcoin: A Promising Future or a Threat?
Looking ahead, the influence of cryptocurrencies and BTC will continue to expand. Its role in shaping the future of finance is nothing short of transformative, and it will grow in importance as cryptocurrency adoption continues its upward trajectory.
By Audy Castaneda
