Welcome to the Future: 7 Aspects of How Bitcoin Has Impacted the Global Economy

Bitcoin is one of the most popular type of cryptocurrencies to date, allowing two parties to share currency transactions digitally outside of the central banking system. Already, you may start to think of how and why Bitcoin can be beneficial on a general level; however, do you know just how influential it has been on the global economy? You can be the judge and decide for yourself if the following points are generally positive or negative.

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Potential for a stock market crash

Bitcoin’s worth is currently over $100 billion. For now, investors are interested in the idea of investing in Bitcoin. However, word is going around that all things – even Bitcoin – must come down with time. If and when something happens to Bitcoin, some believe it could impact the stock market so severely enough to cause a major crash.

The latter point seems like a complete exaggeration, but the thing is, Bitcoin and other cryptocurrencies have been gaining popularity at a rapid rate – especially within this past year. That said, the larger it grows, the greater it can fall, making more significant of an effect on the market.

Replacement of fiat currency

Bitcoin is still in the growing process and is nowhere near as powerful and popular as fiat currency. Still, with Bitcoin being seen an alternative to fiat currency, it has, many times, replaced such. But to say that Bitcoin is or will completely replace traditional currency is an overstatement at this rate.

For some, the idea of replacing fiat currency is viewed as a benefit as cryptocurrencies aren’t federally-operated. As a result, some believe Bitcoin has the power to essentially overtake central banking facilities’ control over the economy and ability to issue money – which may be a pro or a con depending on where you stand.

Bitcoin could also be a considered a benefit in that Bitcoins can be viewed as a national currency as different forms of cash can be exchanged.

An entry to the Dark Web

Because Bitcoin transactions are virtually anonymous and ambiguous, money can be transferred secretly. In turn, there can be a plethora of illegal transactions and trading of different currencies from country to country quickly and effortlessly.

But using the Dark Web for monetary exchange can also be a great in the sense that many countries around the world have distrustful central banking systems, leaving Bitcoin the more trustworthy and safer option in some cases, especially when it comes to corruption.

Easier avoidance of income tax

Because Bitcoin does not display the names of parties making transactions via its system, this means Bitcoin will surely attract dishonest individuals who refuse to file annual income taxes on money obtained through the platform. Plenty of financial secrets can be kept due to the anonymous structure of Bitcoin.

Making it even easier to avoid the responsibility of filing income tax, Bitcoin holders can receive their money online and quickly buy other things online (which is common as Bitcoin valuation rates fluctuate drastically), making it seem as if there is no need to report such income as it can be easy come, easy go.

Additionally, the confusion with how to report Bitcoins as income tax alone is stopping many from paying their taxes, even though there are many resources online instructing one how to file Bitcoin taxes or even accounting services for such.

Sales of illegal items

Here we are again with the ambiguity of Bitcoin. Not only are names kept private as we discussed, but what people sell or trade with others in exchange for Bitcoins can also be secretive. This means items can be illegally bartered from firearms to underaged or illegal sales of drugs.

For illegal products or services sold with Bitcoins, people can get away easier than if they paid with fiat currency due to the secrecy tied to Bitcoin.

Increase in scams, payment fraud, and identity theft

Also due to the subtle transactions able to be made with Bitcoin, it’s also clear to see that there would be an increase in scams from this source. Individuals can be harder to track down, making them believe they can get away with taking people’s money and running.

Even though individuals’ addresses are posted publicly when a Bitcoin transaction is made, there’s still significant privacy involved that make it significantly easier to scam and get away with it.

Considering that Bitcoin is apart of the Dark Web, a dangerous place, there is also potential for a greater risk of theft and fraud and no guarantee for protection.

New ways of purchasing products and services

With Bitcoins in the picture, some businesses have begun to accept them from customers as a form of payment, allowing for greater versatility in the market.

If those businesses report Bitcoin transactions as personal income tax, there would be a positive effect on the economy considering that with more types of currency accepted, the more consumers that can take part in putting more money back into the economy.

However, for the businesses that don’t report their Bitcoin earnings, this would clearly have a negative impact on the economy.

But considering that even larger retailers such as Overstock.com have jumped on the Bitcoin bandwagon, it’s believed that the opportunity to shop online more frequently with Bitcoin can do good things for the global economy.

Being a newer form of currency, Stanford does make a good point that one disadvantage to Bitcoin is that it is seldomly accepted among online merchants at this time – but it is making progress. As it gains further stability, security, and buyer protection, Bitcoin will even have greater potential.

Conclusion

Bitcoin has had an impact on the economy world-wide. It has benefits for many, but nevertheless, it isn’t without its cons. Bitcoin may not be replacing central banks anytime soon, but it has had considerable power in our world today despite only being around for since 2008. As it grows larger, we expect it to make an even larger impact on our world’s economy.

What to Consider Before Investing

Investing is a risky business in which people should only enter into once they are fully prepared for each potential outcome. As such, there are several key factors to consider before taking on a serious financial investment, including thoroughly assessing your finances, paying off debt and protecting yourself from the unthinkable.

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Read more to understand each before deciding whether to part with your hard earned cash.

Examine your financial situation

Before making any investment decisions, it is advisable to take a candid look at your whole financial situation and decide whether now is the right time for you to invest. Carrying out a full examination of your ingoing and outgoing finances per month is a good place to state and will allow you to get a clear picture of what you’re at, whilst discovering areas in which savings could be made.

You can begin by listing all your income sources, such as salary, savings, benefits, pensions and any financial support you might receive regularly from family. Next up, work through your previous bank account statements and list all your regular expenditures, making sure to take note of any standing orders and direct debits that go out, particularly if they are old and you no longer use them.

Once you’ve done this, you can decide which outgoings are essential, and which you can make savings on by getting rid of or by switching suppliers. You’ll often be surprised at how much you spend on things you do not need or rarely make use of, and by ridding yourself of those added costs, you could be on the right path to investing.

Pay off major debts

Any financial adviser will warn against investing before your major debts are paid off, or at least under manageable control. This is crucial, because if you have a significant amount of outstanding debt they will likely outweigh any of the returns you can expect to gain from your investments. Paying off debts on personal loans and credit cards which have high interest rates is, therefore, a wise idea.

Protect yourself

Any smart investor will tell you to start a backup savings fund to protect yourself in the case of an unexpected turn of events, such as unemployment or falling ill. As a general rule, having between three to six months’ worth of income to fall back on via an emergency savings account is wise, and this should remain untouched and separate from your investment funds.

You should also think about getting yourself covered by life insurance or income replacement cover. If you are self-employed, you might want to consider income protection insurance.

Determine your risk tolerance

Investing in anything is always a risk and the old saying certainly rings true – you should only invest that which you can afford to lose. However, more risk often means better returns. That being said, not everyone can afford to take big risks with their capital, nor may they feel comfortable doing so. It is up to you to decide what your risk tolerance is and act accordingly.

Seek professional advice

For first-time investors, skilled advice from the beginning is a very smart move and may be more than enough to help you get the ball rolling. Financial advisers can help examine your situation and create a solid plan of action based on your goals. They will also help you understand the risks associated with any investment you might be considering.

Moreover, there are many enterprises out there which can help you decide where to invest and whether an investment is good enough, such as an investment fund research company.

Remember, investing is risky business and on many occasions, you may receive less than what you put in. If you are not sure whether to invest, seek expert advice!