The value of Bitcoin keeps increasing with each passing day. Investors from across the world have recognized the potential Cryptocurrency holds in the present market situation. The upward movement in the value of Bitcoin attracts more investors and miners. In this article, we are going to delve deep into how the surge in Bitcoin value impacts the economic growth in various countries.
Cryptocurrency and Developed Countries
In countries like the U.S. and the U.K., Bitcoin though is looked upon as an investment, will take a long time before it gets accepted as a currency. The U.S. dollars and the European pounds are strong competitors in terms of currency. They are stable currencies, and hold a lot of value. The natives of the developing countries are less likely to opt for Bitcoin as a transactional currency due to the presence of their own national currencies.
Bitcoin has to be more reliable, trustworthy, and widely accepted. Unless the use of Bitcoin does not spread far and wide, transactions will not be possible. Moreover, with transactions going cashless, there is very little need for the developed countries to consider any other currency. Their own currencies are working most effectively not just in the domestic arena, but globally. Hence, there is lack of opportunities for Bitcoin to thrive in these markets.
Opportunities in the Developing countries
The situation in the developing and third world countries is quite different. There is an evident lack of stable currency in these countries. The currencies used are susceptible to market changes, and their value keeps decreasing due to inflation. Such a thing hampers economic growth greatly.
Moreover, there are some developing countries that use multiple currencies. This too is an inconvenience for many people. This can be avoided by assigning Bitcoin as the primary currency in the country. The value of Bitcoin is not subject to changes in accordance to the market forces. No individual, no government has control over its value. The developing countries will not have to suffer from inflation under such circumstances.
A businessman in a developing country may receive payments in various currencies. He will have to get all his money converted into his preferred currency at the end of day. Having a mix of currencies is not just confusing, but also inconvenient. This would deter people from making transactions. This will lead to the economy to a standstill. For economic growth to happen there has to be transactions. By choosing Bitcoin as the currency, the fear of inflation is resolved. People will be encouraged to make transactional exchanges, thereby leading the country to economic growth.
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Challenges Faced in the Developing Countries
There are several challenges that Bitcoin faces in developing countries as well. Some of them are as follow:
- Bitcoin faces a huge competition from XRP which has strengthened its hold in the markets of the developing countries. They are already working on various projects in those markets, and have become a reliable alternative. XRP is on its way to establishing dominance in the global market. That makes it a bit more viable than Bitcoin.
- The Transactional Speed of Bitcoin still remains a questionable area. The Lightning Network has undertaken the work of making the speed of Bitcoin transactions a less concerning issue. Until then, XRP remains an extra mile ahead of Bitcoin. It takes less than no time to make transactions happen, and get payments done.
- Scalability remains a huge issue for people using Bitcoin. The block chain technology requires a huge amount of money for transactions. With every new Bitcoin transaction, the amount of money involved is getting higher. If Bitcoin were to be adopted as the primary currency, the transactional costs would not be affordable by most people in the developing countries.
Working on the various issues that people might face would make Bitcoin a very accessible and transparent mode of transaction. That would facilitate economic growth in a great deal.