How can cryptocurrency payments stimulate the economy by helping businesses and consumers?
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Much has been said lately regarding tax cuts and economic incentives to drive the global economy. When tax reforms are discussed debates are sparked about political motives, winners and losers, and the overall efficacy of the propositions. What if there were an easier and more inventive way to stimulate the economy by helping businesses and consumers? The answer has arrived in the form of cryptocurrency payments – a way to achieve economic growth, job creation, and wealth accumulation. This can all be achieved through cryptos’ peer to peer decentralized systems.
In order for crypto networks to become the primary technology used in global transactions, it will require a critical mass of users to achieve ubiquity and market efficiency. If we look at the volume of global digital payments in 2017, the total card transactions are likely to exceed $30 tln. If a conservative measure of 10 percent of these transactions can be processed on crypto networks, that would yield $3 tln of value transfer to businesses and consumers. Again, assuming 0.1 percent – 0.2 percent of commission on this volume, this could easily mean $3–$6 bln of commission for crypto networks annually. These numbers are staggering and one of the main reasons cryptocurrencies such as Litecoin, DASH, and Bitcoin Cash were developed. These cryptocurrencies look to democratize transactions, eliminate needless third parties, and remove the many barriers associated with sending and receiving money.
We can add in global remittances, which are in excess of $600 bln per year, according to Pew Global Research. The chart below, courtesy of Pew Research Global, highlights remittance payments from the United States. Looking at 10 percent of global remittance volume and 10 percent of global card transaction volume in 2017, a single cryptocurrency can reach roughly $ 6–9 bln in commissions. The integration of crypto networks for both global remittances and transactions will reduce fees, thus allowing the savings to be passed on to consumers and create more velocity of cash in the world economy. One of the beauties of crypto networks are that many of these fees can be eliminated by integrating decentralized technologies into a myriad of applications. Removal of friction along with the creation of more transaction channels will provide far more rewards than risks and should evolve into the way all transactions of this nature occur.
Crypto network transactions will be nearly instantaneous with little to no fees. Other advantages include the immutable Blockchain ledger which disallows double spending, credit default (for the most part), and charge backs. These issues are among the chief reasons global remittance and digital payment systems still rely on VISA, MasterCard, and American Express, because the fee that is paid to these parties is supposed to work as insurance against these occurrences. Once crypto networks become ingrained into these systems the economy will be able to reap immediate benefits. Networks will continue to optimize by growing Blockchain technologies and decentralized applications, both of which will thrive on these rails.
Issues such as cryptocurrency volatility, safety concerns, and lack of understanding are hindering widespread adoption for global remittances and digital payments. What many fail to realize is that crypto, when integrated properly, can be utilized as a hedge against currency inflation/volatility, is safer and faster than the Visa, MasterCard, and Amex, and that these currencies can be traded by the owner to generate more profits (a relatively cumbersome process with traditional fiat currencies). This is unprecedented in history, never could a business accept decentralized secured payments, see the transaction clear in minutes, and then trade the digital currency on an open exchange. This technical loop reduces redundancies and friction not only in point of sale systems, but transaction clearing and banking.
The crypto community of developers, miners, and early adopters has always focused on constant improvements, which unlike more established ecosystems can be done with relative ease and quickness. The belief in the principle of constant improvement along with open source innovation has propelled the technology to this point, but only when crypto is used in practical ways, like the areas mentioned above, will crypto truly usurp the inefficient centralized systems which are now in power. Crypto is decentralized money, controlled by the people, who will choose to use it in ways that will start providing economic stimulus. The widespread use of crypto as the primary mode of global remittances and digital transaction will be just the beginning, we will soon see entire industries reform due to this revolution in technology and money.
The facts are apparent, the global economy would greatly benefit from the widespread implementation of this technology. Keep in mind that global remittances and digital payments are only the tip of the iceberg. Crypto is here to stay, so embrace it and start reaping the benefits now. This is truly the way to provide economic stimulus along with giving the power of money back to its users.
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Author: Guest Author