The Bitcoin as a cryptocurrency has not been around for very long. Invented in 2008, people wondered what its effects on the economy would be in the long run. After all, the transfer of Bitcoins is completely anonymous and not part of any central bank system
It is the very definition of cryptocurrency: It is secret and completely independent. The only thing keeping it in check is its extensive ledger system, known as the ‘blockchain’. To use your Bitcoins for transactions outside of the internet, you will need sites like Bitbroker, who can convert your Bitcoins into British pounds and vice versa.
Since Bitcoins are decentralised, some entities worry about how it affects the economy. Will it siphon money from the banks, never to be seen again?
To an outsider, Bitcoins seem completely mystifying. After all, it does have a reputation for being the favourite currency of drug dealers and cybercriminals. But what is the actual effect of Bitcoins on the economy? How does the digital submarket affect the mainstream market?
Potential for Competition
The real power of Bitcoin is its lack of transaction fees. People transfer and pay money without having to go through any central banks. For banks to keep operating, they usually charge various fees. The use of Bitcoin scraps the use of intermediaries, allowing people to pay directly with no losses, as with cash.
If Bitcoin becomes more widespread, it has the potential to breed competition with central banks and companies. They will be forced to bring down costs in order to compete.
Potential for Strengthening the Economy
Once Bitcoins manage to bring down banking costs due to competition, it has the potential for strengthening the economy. People who previously could not afford to open a bank account due to extortionate transaction fees can now do so. It will be especially beneficial to the economy of poverty-stricken countries.
When Bitcoins first started gaining traction, people worried about its effect on the economy. Since its inception in 2008, people now see its real effects.