Can Blockchain become the backbone of a Global Economy?
The blockchain technology is becoming the golden opportunity of making Global Economy more accessible and democratic for the countries where the financial system is not solid.
The blockchain technology is transforming not only Economy itself, but also the way people are relating to money and finances. Firstly, it’s cutting out the middlemen, such as central banks, and decentralizing major exchanges with more security. It’s no newsflash that it has the potential to massively impact the global trade industry.
According to CoinTelegraph, the blockchain could bolster the global trade to the tune of $1 trillion by 2028. The prosperity of the cryptocurrencies explains why, every day, new and more startups are engaging in marketplaces: because the technology provides safe, accessible solutions for most problems associated with the financial system.
The centralized banking system requires a massive infrastructure to implement and invest capital, and this behavior is not profitable in poorer nations – that lack access to basic structures, such as hospitals, for instance.
That’s why the blockchain technology could be cost-effective and highly efficient even for third world countries.
We listed the most important reasons why the blockchain is becoming the backbone of a global economy and how it’s already changing the current centralized economic stance:
Blockchain is changing global payments
Countries with less influential fiat currencies have fewer opportunities of becoming important players in the global economy. That usually happens because the central banking system is very dollar-focused and can also be punishing on companies or individuals who attempt to offer services internationally. And how can banks punish them? Well, by currency’s conversion, of course.
A conversion can make any company lose a significant amount of buying power if their coin is not equally valuable to the other parties. Cryptocurrencies, however, are decentralized: so they have no affiliation with any organization in particular.
Bitcoin, for instance, it’s not regulated by a central bank in any way, so it’s confronting the traditional way of how institutions are strategically controlling the global market. Since the creator of BTC (the first cryptocurrency that emerged on the crypto sphere), the alias of Satoshi Nakamoto, is completely anonymous, the governments can’t regulate it completely.
When we mention global payments, we also mention remittance and taxes, which can differ from country to country. That leads us to the application of the blockchain technology in open banking: it can be also implemented in the banking system as an alternative to reduce corruption and sky-rising taxes.
That’s because the “transparent” nature of the blockchain can prevent baking or governmental schemes that can harm the population somehow. Especially from skewing the books or doing bailouts, which, unfortunately, is very common in countries like Zimbabwe, for an example.
Tired of inflation and corruption, the population of Zimbabwe is calling upon the blockchain to dribble the problem: in consequence, more and more digital investors are looking up to southern Africa, as the technology emerges in the country.
Not only the technology is more transparent, but it’s also smarter: citizens that rely on remittance payments (that are often sent by countrymen working in other countries), now, can be sent for a fraction of the cost and directly via blockchain.
It’s more democratic?
In comparison with centralized currencies, Bitcoin, Ethereum and any other cryptocurrency can be described as more democratic. That’s because it allows safer transactions and exchanges with no centralized institution or bank to control it like the legal tender as we know it.
Cryptocurrencies can’t be used as physical currencies in some countries, such as the United States, for instance, because they are seen as a competition with the legal tender. However, they are already being used in major exchanges worldwide, allowing equal access on a global scale.
The blockchain technology is the main responsible for that democratic access, especially for people that are being drowned in corruption to seek a legitimate alternative to the system. It has the potential to become the backbone of a global economy because it provides “untethered” access for those individuals who are looking to participate in it.
It is already happening!
The “digital revolution” is already happening, since big amounts of paper that are commonly used by central banks in transactions are already being replaced by the online solutions that the blockchain provides. And, the initiative is coming from the banks themselves. HSBC, for instance, completed its first trade finance from Argentina to Malasia through the blockchain in May 2018.
Blockchain has the real ability to cut out the middleman, and offer potential benefits for the global trade, for the investment sector and, most importantly, for the countries which the economic system is not solid, and it’s far away from being fair.
We can’t predict if the governmental institutions could regulate and centralize transactions and global exchanges that happen in the blockchain in the future. For now, we can only confirm that it’s becoming the backbone of the world’s economy, making it more accessible and democratic for all of the nations.
Democracy and accessibility is a trend that came to stay, and that’s one main principle of blockchain technology.