Bitcoin is a type of intangible currency that only exchanges through online networks. There is no intermediary for transaction. For more details, please refer to this link: https://en.wikipedia.org/wiki/Bitcoin. Bitcoin gets famous because "Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into a public ledger". The usage of Bitcoin was encouraged in the perspective of vendors because there was no fees for vendor that credit card companies used to charge 2~3% of commission. However, international governments including European Union warned that the usage of Bitcoin cannot be protected by the government funds.
In the meantime, there is an interesting article suggesting that Bitcoin can be a solution towards another financial crisis. Please refer to this article: http://www.newsbtc.com/2016/04/03/next-looming-financial-crisis-potential-boost-bitcoin/.
In the article, the reporter claimed:
"As horrible as the thought of a new financial crisis is, there have been plenty of warnings about how things needed to change in 2007-08. Unfortunately, governments and central banks decided not to listen to these warnings, although some minor reforms have taken place in a few countries. But on a bigger scale, the economic situation has remained at status quo, rather than alleviating the stress of the financial crisis.
Then again, a secondary financial crisis would push even more consumers and enterprises in the direction of alternative financial services and solutions. Bitcoin is an obvious contender in this regard, as it is the only viable global form of transferring value that is not dragged down by the banking ecosystem. Despite some of the flaws in Bitcoin that need to be addressed – such as the scalability issue – Bitcoin is a far more preferable financial solution than other services.
Granted, there is still a mental entry barrier to overcome when switching from fiat currency and bank accounts to Bitcoin. That being said, the advantages outweigh the downsides, as users are in full financial control without relying on middlemen. Doing some research on the topic is necessary for everyday consumers, but it will be an eye-opener, to say the least."
How do you think about Bitcoin? Can it be a real solution for potential financial crisis in the future? What is your opinion towards the article above? Do you agree or disagree? Please feel free to share your ideas, opinion and other sources.
The drawbacks that result from transactions using bitcoins would be severely reduced if the currency was used on a larger scale. Bitcoin's rise to popularity (through its use to purchase illegal goods) may have tarnished its reputation, which is unfortunate given the capabilities of the currency. One thing that I fear is the fact that it is virtually untraceable. Often times when there are issues in the financial sector all one needs to do is to follow the inflows and outflows of money. Bank commissions are a real pain to everyday borrowers and lenders. However, it is often these small (but numerous) transactions that allow banks the liquidity to make new loans and maintain the costs of their businesses. I'm not sure that an unregulated currency could help prevent a financial crisis, but I do believe that Bitcoin is a step in the right direction.
ReplyDeletePersonally, I'm not super familiar with bitcoin aside from a basic wikipedia rundown. However, I do already have some negative connotations that I associate with it, like Anthony mentions, of people using it to buy illegal goods, or to not have their transactions traced.
ReplyDeletePerhaps it's just a matter of learning more about it, but I'm not really sure how this digital currency would be a solution to another financial crisis.