Future of Bitcoin Essay Example

Introduction

In the current era of globalization, e-commerce practices have revolutionized to a great extent. Remarkably, the world has transformed from the use of paper and electronic cash to the use of virtue currency. Bitcoins were launched in 2009 and utilized various vendors such as Bitpay. Bitcoin has successfully dominated the e-commerce sector and still has a long journey towards transforming the financial system (Antonopoulos 23). Despite the evolution of money banking services, such as MasterCard and Visa, bitcoin's ability to traverse financial barriers, allow access to credit services, and its incredible security will enable it to dominate the global economy in the future.

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Bitcoin's Contribution to the Economy and Gross Domestic Product

Bitcoins contribute to the economy in diverse ways. Firstly, they decrease the world's reliance on fiat money. Since the invention of money, the global economy has relied on paper and coin money as the primary means of exchange (Antonopoulos 25). Nevertheless, the digital revolution in the economic system will foresee drastic transformations in the future. For instance, bitcoins, which mainly relies on data exchange, will replace the existing monetary system that utilizes a centralized financial structure. Consumers growing interested in using electronic and digital cash to pay for products and services support the phenomenon. Furthermore, Bitcoin utilizes online wallets unlike conventional methods such as banking. Bitcoin wallets allow individuals to store and manage their bitcoins will full confidence due to the security enjoyed with the system.

Secondly, bitcoins allow unlimited access to credit systems. Unlike the present financial system, they are not regulated and solely depend on data. The situation enables them to transverse economic barriers such as taxation to create a stable credit system (Bohme, Christin, Edelman, and Moore 220). Notably, current global merchants lack adequate facilities to venture in various financial markets. However, bitcoins can bridge the isolated populations allowing them to borrow and invest just like others. In doing so, the system will open up new opportunities and markets that have a positive impact on global economic growth.

Thirdly, bitcoin has become popular in the world due to its minimal withholding and transaction charges. Typically, banks impose an exorbitant rate on international money transfer, which serves as an obstacle for small and medium enterprises to venture into global markets (Bohme et al. 222). Moreover, the traditional methods require much paperwork and are time-consuming. Nevertheless, bitcoins offer a cheap, more accessible, and faster way to transfer digital cash across boundaries.

Fourthly, bitcoins can stabilize a country's economy. Despite its fluctuations-that are minimal-, bitcoins are more stable than the Euro or dollar. In this case, states can utilize bitcoins to secure their finances (Bohme et al. 222). For example, economic inflation has been on the rise in Venezuela in the past decade; therefore, the country's denomination is less stable compared to cryptocurrencies. Venezuelan citizens can utilize bitcoins to store their funds and evade harsh economic periods.

Significantly, bitcoins have increased global e-commerce due to its security and flexibility. The e-commerce sector has foreseen a tremendous growth in the twenty-first century due to technological advancements. Noticeably, it has sustained severe cases concerning data safety and fraud due to the existing forms of money transactions (Underwood 17). Nevertheless, the introduction of bitcoins has reduced the risks extensively. They are safer since they have irreversible transactions, which eliminate fraud and increase e-market vendors' confidence. Furthermore, transactions are efficient and fast, which has increased the rate of online shopping.

Bitcoin's Contribution to GDP

Bitcoins have a significant contribution to a country's gross domestic product (GDP). GDP is an estimate of a country's wealth by measuring the value of all goods and services produced and the value of income and outcome flows. Bitcoins add value to an economy through the mining process, which is a form of output to miners and input to investors. Additionally, the method utilizes extensive labor and energy consumption. Nations can account for bitcoin revenue generation through the cost of equipment's, employment, electricity, employee wages and internet costs if they are sourced locally (Extance 21). On the other hand, states may account for labor and equipment imports as net exports. Notably, once investors withdraw their profits, they increase a state's disposable income, which facilitates buying of goods and services. Therefore, the "wealth effect phenomenon" contributes to GDP.

How Bitcoins Affects Individuals or Companies in Making Business Decisions

The emergence of bitcoins has affected how businesses and individual make financial decisions. For multinational companies, the trend serves as an opportunity to venture into new markets, which increases their profitability (Sovbetov 15). In this case, financial managers might decide to introduce bitcoin mode of payment as alternative methods to cash and electronic money. Noticeably, firms such as Shopify and Overstock Inc. have implemented the use of bitcoins. Overstock Inc. was the first online merchant to introduce Bitpay payment method. The firm registered about a thousand customer orders on the first day of implementation. On the other hand, bitcoins might motivate individuals to store their funds in the form of cryptocurrency to avoid cases of fraud and economic inflation in their countries. Moreover, with bitcoins, people have a fast and convenient method to buy goods and services in diverse markets including black markets.

Bitcoin Market: Employment, Investments, Long-Term Viability, Relations with the Government and Foreign Market

The bitcoin market has advanced in the past years due to the increased number of investors and miners. The demand for cryptocurrency in e-commerce has also improved as many countries venture into the lucrative endeavor. Despite the emergence of numerous digital currencies, bitcoins are the most secure and accessible in the market. For instance, global e-merchants such as eBay, Walmart, and Amazon have expressed their interest in implementing the Bitpay blockchain to allow consumers to pay for goods using bitcoins (Rice 1). Moreover, banking systems are now venturing into cryptocurrency to secure the stability of their funds.

In the employment sector, bitcoins have reduced the unemployment rate, especially in developing countries. Typically, it involves data mining, which is the execution of sophisticated computer algorithms to create bitcoins. Despite, the processes utilizing extensive labor and energy, it is accessible to many individuals across the world; thus creating new jobs. According to Extance, the global annual revenue generated by bitcoin is approximately ten trillion dollars (21).

Cryptocurrencies are viable and secure compared to other forms of payment. However, due to anonymity associated with these digital currencies, they may conflict with government institutions since they promote black market trade such as the purchase of firearms and drugs. Moreover, governments are unable to impose taxes on cryptocurrencies. In the foreign market, bitcoins have gained the support of large multinationals due to their ability to open up new markets.

Industries Affected by Bitcoins

The e-commerce industry will be affected mainly by the proliferation of bitcoins in the future. Currently, consumers are shifting to cryptocurrencies at an increasing rate due to their convenience and safety (Carrick 2334). The phenomenon will favor those who adapt to the change promptly. In this case, online platforms will have to introduce bitcoin payment methods to remain competitive in the market. Secondly, the banking industry will lose customers once the bitcoin market fully develops. People are shifting from bank transaction to digital currency to avoid hefty tariffs and gain access to credit services. The situation will adversely affect the banking sector.

Recommendations to the Government to Increase the Efficiency of Bitcoins

If government policy is implemented to control the use of bitcoins, I would advise lawmakers to monitor and increase online security. The situation will safeguard the interest of citizens who may become victims of hacking and online fraud. Hackers may capitalize on people's computer illiteracy to steal their investments by luring them into fake blockchains (Underwood 16). Additionally, I would recommend the government to promote the lucrative idea among the youth to reduce the unemployment rate in the country. Finally, I would urge the lawmakers to increase their online surveillance to reduce instance where bitcoins are used to purchase illegal artillery that can destabilize the country.

I am passionate about the future of digital bitcoin currency in the global economy. Regardless of it being in use for a short period, it has had tremendous success. It has revolutionized the e-commerce services and opened up more markets. I believe that with proper regulation and stability, cryptocurrencies may surpass the Euro or dollar's dominance in the world shortly. Moreover, I would recommend people to use bitcoins blockchains compared to other cryptocurrencies due it improved security and stability.

Conclusion

Overall, Cryptocurrencies, especially bitcoins, have captured the heart of many multinationals and other financial markets globally. Notably, since cryptocurrency is decentralized unlike centralized money banking, about four thousand variants have emerged none of which match the success of bitcoins. They have revolutionized the E-commerce and banking systems across the world. They also contribute to a nation's economic growth and GDP. It is incumbent on individuals to invest in the lucrative idea to reap its future benefits.

Works Cited

Antonopoulos, Andreas M. "Mastering Bitcoin: Unlocking Digital Cryptocurrencies. " O'Reilly Media, Inc., 2014.

Bohme, Rainer., Christin, Nicolas., Edelman, Benjamin., and Moore, Tyler. "Bitcoin: Economics, Technology, and Governance." Journal of Economic Perspectives, vol. 29, no. 2, 2015, pp. 213-38.

Carrick, Jon. "Bitcoin as a Complement to Emerging Market Currencies." Emerging Markets Finance and Trade vol. 52, no.10, 2016, pp. 2321-2334.

Extance, Andy. "The Future Of Cryptocurrencies: Bitcoin and Beyond." Nature News vol. 526, no. 7571, 2015, pp. 21.

Rice, Denis T. "The Past and Future of Bitcoins in Worldwide Commerce." Bus. L. Today, 2013, pp. 1.

Sovbetov, Yhlas. "Factors Influencing Cryptocurrency Prices: Evidence from Bitcoin, Ethereum, Dash, Litcoin, and Monero." Journal of Economics and Financial Analysis, vol. 2, no. 2, 2018, pp. 1-27.

Underwood, Sarah. "Blockchain beyond Bitcoin." Communications of the ACM, vol. 59, no. 11, 2016, pp. 15-17.