Bitcoin is the frontline cryptocurrency. Most people and communities believe that bitcoins are the founder of the crypto era. Some people are unaware of what bitcoin actually is. Bitcoin is a cryptocurrency that is a virtual store of value. It is not a physical coin but a virtual one.
Bitcoin is traded on many exchanges. Some bitcoin and cryptocurrency trading platforms like bitcoinscircuit.com provide the resources to trade in the market. It is a genuine question of how does bitcoin really affect our everyday lives then?
What Are The Ways In Which We Are Affected?
1. Blockchain And The Economy
To understand to what extent our daily lives are affected by bitcoin, we must first know what blockchain is. Bitcoin is not a currency issued by any single authority. This autonomy to the currency makes it absolute. Whenever transactions are initiated, their details are immediately sent to a large network of devices. These devices perform various calculations by using algorithms. When these calculations are solved, the validity and authenticity of the transaction are confirmed. The data is then stored in the form of “blocks” in an interrelated way, thus forming the “chain”. It is a secure and hassle-free way of storing transaction information in the database such that it cannot be altered or meddled with.
How is blockchain making a difference? As it is has been mentioned before, there is a network of devices that perform calculations to verify the authenticity. These devices do not do it free of cost. The first device to crack the complex encryption gets a fraction of the transaction value. This payment acts as a convenience fee paid to the bank. Blockchain is, therefore, a massive occupation for many. Programmers and investors work together to build the perfect blockchain software to mine as many bitcoins as possible. The convenience fee that would normally go to the bank is now going to people performing blockchain.
The distribution of income improves the liquidity in the market. The Money that would be collected as transaction charges when transferring fiat Money issued by governments will now be lent out by banks back to the public. Blockchain avoids such capitalism.
2. Substitution Of Currencies
As bitcoin is a virtual currency, people have a decent amount of conviction that it will become the international currency the world requires. Currently, most countries use the US Dollars in their foreign reserves. Some countries like Kuwait have pecked their currency, Kuwaiti Dinar in this case, against the US Dollar. It is predicted that eventually, the value and dominance of US Dollars will decline as we move towards a more technologically advanced world. In a world where most people are now transacting online, bitcoin is not a very difficult option to shift to. The autonomous nature of bitcoin is what attracts most people as no single country or individual has to control over it.
Therefore the implication is that as more and more people shift to bitcoin or at least adopt it, other currencies will eventually be moved out of existence. Dependency on one virtual currency will remain. It will be a gradual process, but it does affect how our foreign exchange now reacts.
3. Trading Economy
There is a certain amount of Money in the world after combining all forms of wealth and Money. It has been allocated in various different things. This diversification means that people’s Money is invested in multiple things like real estate, stocks of various companies that work in different industries and many more. When bitcoin was introduced, and people started realising its value, the price of bitcoin shot up.
Early investors who took a bet on bitcoin are filthy rich at this point in time. Whether it will continue to rise and give such massive returns or not, only time will tell if people and countries really adopt bitcoin while dumping their own currencies or not. If national currencies are replaced with bitcoin, the value of a unit can be too high in the future. Due to such potential and unrealistic returns that are not offered anywhere else in any other asset, the general public, especially the younger generation, is willing to invest a certain amount of their income or savings into cryptocurrency.
This behaviour change now implies that people are pulling out a certain amount of Money that would have been invested in other assets or loaned out by banks. It is creating a different marketplace in itself. It is still questionable that it is helping the economy because the fiat currency demand is falling.
With the advancements o the human race, metaverse, previously considered science fiction, is now heading towards becoming a reality. People believe that bitcoin and other cryptocurrencies might head the way for economic transactions in the metaverse. This belief is so strong that one might say that in future when the metaverse actually arrives, the users might prefer bitcoin over fiat Money. Metaverse will possibly not have countries as there are in the real world. The need for a decentralised store of value is a must.
Bitcoin has spearheaded futuristic projects and will continue to do so. Most metaverse projects are currently only viewed as a gaming universe. As and when more people join the metaverse, a virtual industrial revolution could occur.
Many individuals prefer making crypto transactions because their records are absolute and almost impossible to track down. It has also led to the private transfer of a huge amount of funds. Black Money and smuggling are being funded greatly through this medium. Despite the negatives, bitcoin seems promising.
Even if it cannot be the future international medium of exchange, it will surely remain a good asset to trade at the moment. With proper techniques of trading, one can make a handsome amount of fortune off cryptocurrencies.