Since the emergence of Bitcoin in 2009, the implementation of cryptocurrencies has been well-known to the public. Due to the autonomy and convenience of cryptocurrencies, this new form of currency has become a globally popular and viable source of currency, leading to the development of various cryptocurrencies as alternative sources of currency.
OKX_ Global Digital Currency Trading Platform, click the link below to register on the OKX exchange official website, and the highest council will receive a blind box reward of 10,000 USDT!
OKX registration address: https://www.okx.com/join/OK234
Huobi / Binance / OKX Android APP download: https://688li.com/
Binance registration address: https://www.binance.com/zh-CN/join?ref=587926281
Cryptocurrency is a disruptive economic invention that has the potential to change the current economic structure and the way banks and financial institutions operate, with Bitcoin being the most widely used cryptocurrency, allowing two parties to conduct digital transactions without a third party. Many investors want to know the impact of cryptocurrencies on the real economy, so let me analyze it for you.
Impact of Cryptocurrency on the Real Economy
From a practical standpoint, blockchain is increasingly integrated into the existing financial system, with interconnections between cryptocurrencies and the current currency system. The emergence of stablecoins has further deepened this connection.
In the real world, there are still very few places where Bitcoin can be used directly for shopping. Even blockchain technology enthusiast Elon Musk is hesitating about whether to accept Dogecoin as a payment for Tesla.
From the perspective of existing investors in virtual currencies, most are still retail investors, and they mainly use it for investment (not discussing money laundering purposes). Therefore, there is currently no significant impact on the existing financial market; it is merely a high-end derivative market. Additionally, due to the lack of "purchasing power," it feels more like trading in a dark box, unable to affect the real economy.
Cryptocurrency is no longer an outsider; it has long infiltrated the global economic system. If stocks are the barometer of the economy, then now, cryptocurrency is the precursor to stocks.
When discussing how cryptocurrency serves the real economy, Zhou Xiaochuan stated that when it comes to innovations involving cryptocurrency, the Chinese side's attitude is also focused on how to serve the real economy in many analyses and discussions. If it can make significant contributions to the world economy, people may provide more assistance; otherwise, it will be weaker.
Zhou Xiaochuan mentioned that some cryptocurrencies have lost the opportunity to return to the payment field. From the original design concept, cryptocurrencies could become useful tools for serving the real economy, such as playing a certain role in the payment field. In the early stages, cryptocurrencies have some shortcomings, such as not processing enough transactions per second, consuming a lot of network resources and processing power, and emphasizing decentralization to the point of reducing regulation.
Summary of Cryptocurrency Advantages
Here are the advantages of cryptocurrencies in today's environment:
- Cryptocurrencies are attracting investors
Traditional investors were initially hesitant to invest in cryptocurrencies. However, due to the exceptional performance of some well-known virtual currencies, they have gradually gained confidence. Additionally, some investors, especially Bitcoin investors, are adding over 4% of their investment portfolios to cryptocurrencies.
- Elimination of intermediaries
Did you know that unlike traditional fiat currencies, there is no central authority approving cryptocurrency transactions? Central banks and financial entities control fiat currency transactions and monetary policy formulation. When you do business with them, they act as intermediaries.
On the other hand, cryptocurrencies are based on a peer-to-peer distributed network that eliminates intermediaries. You can transfer and receive funds directly from other users over the network. Therefore, cryptocurrencies allow you to have better control over your money.
- Low transaction costs and timely transactions
Due to the lack of intermediaries, the costs and time for cryptocurrency transactions are very low. Banks and financial institutions charge you fees for approving and maintaining payment networks in traditional currencies. Because transactions go through multiple steps, they take longer than cryptocurrency transactions.
Unlike regular transactions, cryptocurrency transactions are not verified by banks or central authorities. Therefore, cryptocurrency transactions take less time and incur lower costs compared to standard transactions. Cryptocurrency miners are not central authorities, although they do verify cryptocurrency transactions. Anyone can become a cryptocurrency miner and join the network.
- Crowdfunding is another beacon
Are you familiar with Initial Coin Offerings (ICOs)? To raise funds in the financial market, companies sell their stocks through Initial Public Offerings (IPOs). Startups can also use crowdfunding to sell their cryptocurrencies.