Digital money such as Bitcoin has the potential to expand the world of international commerce, support finances and completely transform how we shop, save and conduct business. From programmable money to many new forms of e-commerce, here are a few ways in which this new technology will change the economic landscape.
Bank transfers will be faster and cheaper
The way banks work and the way money is moved today will change dramatically with the introduction of bitcoin technology. Using digital currency, bank transfers could be made instantly and without too much cost. These kinds of transfers are a lot safer too. Protocols that support the transfer of funds from one currency to another using a secure digital ledger are also a new way of handling transfers in a more secure way.
Migrants that send home remittances, every year send more than $500 – which exceeds the foreign direct investment too. Technology has the potential to help these transfers become faster and cheaper. Users could send money directly via phones.
Digital currencies could become another convenient and safe form of payment in countries where most citizens don’t have bank accounts. While using bitcoin as a second currency in a country would expose citizens there to a certain amount of currency risk, it might be better than the existing options, particularly in high-inflation countries. For example, it would be physically safer than storing cash at home or buying gold jewelry. In this way, it could expand access to international financial markets, allowing even the unbanked a way to save and protect against inflation. One implication may be that capital controls become harder to enforce.
The potential of e-commerce
Credit cards are prone to frauds and many online merchants turn away good business due to this. Fraud is more common in international transactions and hence many firms do not accept international payments. With digital currency catching on, these firms can eliminate the risk of fraud and sell their products worldwide. The transfers cannot be undone once they have been made. Digital currency allows small businesses to engage in global e-commerce.
The all-new programmable money and smart contracts
Bitcoin is a purely digital asset. It can be moved in automated ways. This introduces a whole new world of programmable money and smart contracts. This could reduce the digital thefts of funds and as in some cases, cryptocurrency has multiple individuals to authenticate. Firms can also ensure that the money is not lost or stolen when it moves across borders.
Programmable money has a lot of scope for implementation in complex contracts such as financial contracts involving multiple parties and complex derivatives.
Bitcoin is definitely poised to change the face of the world economy!