Effects of Bitcoin and Crypto-Currency : on Global Financial and Political Stability
Dec 28, 2017 06:48PM
By Mark L. Dwayne
Financial stability and political stability go hand-in-hand. Venezuela is a good example of rampant inflation, the highest in the world, and how people are using Bitcoin and crypto-currency to survive. In Venezuela, citizens are mining Bitcoin to generate income. Humanitarians are donating using Bitcoin to help buy food and medicine, more Venezuela companies are now accepting Bitcoin, and Bitcoin is being used to buy Amazon gift cards to purchase goods. For Venezuela, Bitcoin has become a life-saving tool for survival.
Last year India recalled 85 percent of its bank notes to collect “taxes.” Many Indians no longer trust the currency or the banks and are buying Bitcoin and other crypto-currency. People in Cyprus woke up one morning in 2013 to find the government took 10 percent out of their bank accounts as a “tax.” Zimbabwe’s currency is no longer even in use. Citizens must use U.S. dollars or other legally accepted foreign currency within the country.
Because Bitcoin cannot be counterfeited or manufactured at will, or controlled by a government, it could easily provide an alternative world currency to hedge against fiat currency abuse and inflation.
In addition, there are those that suggest that Bitcoin and crypto-currency may provide an opportunity for a more level economic playing field, access to banking and global trade that could include the third world economies.
In his article Peace and Stability Through Blockchain: Global Political Awakening and Peace through Trade published on CCN.com in April 2016, Justin O’Connell writes, “Thus far in the blockchain experiment, we’ve seen use cases for how it can be used. As the strongest use case so far, Bitcoin represents a formidable example of how trade and finance can be streamlined, and the unbanked banked.
There are still various other examples in which individuals believe blockchain technology can usher in a more peaceful society. While Bitcoin could do wonders for the unbanked and underbanked, it could do the same in other areas, like humanitarian aid, electric vehicles and welfare.”
Bitcoin has some similarities to gold and provides a useable analogy to explain the probable evolution of this phenomenon. Like gold, Bitcoin behaves like a commodity, a store of value and a currency at the same time. Gold is traded as a commodity on global markets; used as a store of value to hedge against the stock market, and has been used as a currency. Those basic categories apply to Bitcoin as well, though the analogy is not a complete parallel.
Bitcoin is predominantly expressed currently as a traded commodity. As such it is in its “gold-rush” days as it is being discovered. The term “mining” is even used to describe how Bitcoin comes into existence and its transactions processed. As it likely evolves into a “store of value”, ownership numbers will increase, and the volatility and the parabolic price curve will flatten. It may then evolve into more prevalent use as a currency in five to 10 years. Like gold, it may also express in all three articulations simultaneously.
We will see what place Bitcoin and crypto-currency will play in global economics and how its unique benefits are applied and affect global financial and political stability as it proceeds on this evolutionary path.
For more information, visit BitcoinWiseUSA.com.