Effect of Cryptocurrency on the Global Economy

Last Modified:8 Apr 2021 17:59:47
Effect of Cryptocurrency on the Global Economy

It is some time that the cryptocurrencies have appeared in the world of economy and communications. However, there has not been any talk about their effect on the world of the economy yet.

Recently, the European Central Bank (ECB) has announced in a report that the cryptocurrencies have not had any significant effect on the global economy and have not altered monetary policies in different countries very much.

This report shows Which aspects of cryptocurrencies?

Cryptocurrency: The Good or The Bad

What is clear is the inability of cryptocurrencies in proving their features as a replacement for money in the time of their presence. About a decade has passed from the advent of digital currencies, and they are still looked at as a highly newfound technology and infrastructure.

The infrastructure which is absolutely ambiguous and unknown for many people of the world and there is no accurate understanding of it. When there is not any exact application and definition of digital currencies among the public, it is clear that we cannot expect much development.

In fact, cryptocurrencies can be effective on the economy and financial as well as monetary policies of the countries if they become completely accepted in transactions and as a replacement for cash.

According to the report by ECB, the number of European businessmen who have welcomed digital currencies is highly limited. This issue implies the lack of legitimacy and acceptability of digital currencies.

The Status of Cryptocurrencies

It seems that cryptocurrencies are passing through the shadow of doubts and suspicions that don’t let the public accept them. Perhaps with entering stablecoins, which are digital currencies backed by real currencies or precious metals, the possibility of increasing the public welcoming the world of cryptocurrencies gets more.

Stablecoins can provide the required confidence to trust cryptocurrencies. Real currencies or precious metals such as gold and silver are known for all and accordingly, when they are on the scene, investment in and using digital currencies will be more meaningful and tangible for the public.

According to the report by ECB and the remarks of its president, there cannot be much hope in the effective role of digital currencies in the world of economy.

However, such an approach is far away from realism and near being pessimistic. In fact, for a highly newfangled and novel technology, we should consider more opportunity and time more than what really is assumed for a newfangled economic phenomenon.

Putting digital currencies aside and ignoring them as a useless instrument in trade, economy, and communications is a little nonchalant and hasty. One of the main reasons which increase the need to consider more opportunity for digital currencies is the need to make familiar with the computer and new technologies.

Despite extraordinary development of virtual and digital technologies, there are still many people who are familiar with this world and not having enough knowledge an understanding of its mechanism causes accepting digital currencies hard and problematic for the public which itself is rooted in the world of computer and technology.