Bitcoin was invented in 2008 and is indebted to the genius of Satoshi Nakamoto and has remained unique compared to its predecessors due to its deep structure, trading momentum, and wide adoption. The all-digital, cryptographical form of currency has eased the digital transfer of money due to the characteristic anonymity in making payments. It has, however, remained a concern over the reason for its formation and the impact that it has on various levels with fears being raised regarding its role in conducting scrupulous business activities. Regardless of the controversy pertaining its invention and resistance from the central banks, Bitcoin remains a digital currency that has a great impact on the society and promises stability in the global economy.
To the society, Bitcoin presents a positive outcome as it offers a faster and more secure way of transferring money without the risk of fraud. International remittances are characteristic of societies where it is common for those living abroad to send money home. Currently, it is a challenge to execute this task because of the existence of several intermediaries that complicate the money transfer process that include wire services, banks, and currency exchanges all having an effect (Behringer, 2016). However, with the invention of Bitcoin, the societies that solely depend on international remittances have the opportunity to enjoy the service for free with a further guarantee of legitimacy in making transfers.
It is also worth noting that Bitcoin offers a positive solution to the world’s economies and the troubled currency markets. Bitcoin is comparable to gold and other precious metals due to its scarce nature, meaning that new Bitcoins can only be added through mining. The mining process offers a fixed rate of inflation as its computers strive to solve the increasing complicated mathematical problems, which can be a great solution to the present challenge of unstable economies (Behringer, 2016). Bitcoin ensures that a transfer is more secure and transfer authorize only for a specific transaction, with the independence inferring to a more stable form of currency than traditional currencies such as the dollar. In the long-term, the advantage would imply a positive effect on the global economy (Behringer, 2016).
However, amid the noted positive effects, Bitcoin has faced resistance from the realization that it directly influences the federal reserve’s ability to control the economy. A statement issued by the Bank of International Settlements (BIS) has since warned that Bitcoin is a challenge to central banks’ issuance of money and limits the functions of the central bank (Frost, 2017). In fact, it is hypothesized that it also has the potential of obviating the central body and its functions in the extreme case with stakeholders responding by suggesting the need for the issuance of a digital version of flat currencies. The effect has resulted in massive resistance from the US Federal Reserve and the People’s Bank of China following the realization that it possess a huge change for Central Banks in many countries (Frost, 2017).
In summary, it is worth noting that despite the negative effect perceived by the federal reserve, Bitcoin has positive implication both to the society and the global economy. The central banks are concerned that the digital currency could replace them and have been more resistant. However, the society is poised to benefit due to the ease of money transfer among families living in different geographies and also offers a more lasting solution to unstable world economies.
Behringer, V. (2016). How Bitcoin may change the Global Economy. Money 3.0. Retrieved from http://news.nationalgeographic.com/news/2013/10/131014-bitcoins-silk-road-virtual-currencies-internet-money/#close
Frost, E. (2017). The impact of Bitcoin on Central Banks. International Banker. Retrieved from https://internationalbanker.com/banking/impact-bitcoin-central-banks/