Thursday, 18 May 2017

Bitcoin has come to revolutionize the world economy.

When you think of the digital money revolution, the P2P currency always comes out in the talks. Bitcoin is a currency that does not stop growing in relevance. Based on its technology, Bitcoin is called to play a leading role in the future of money, but perhaps its importance is not the "currency" as such but the possibilities that it offers to the international financial system, which could go from relying on the banks and the people, to deposit the security of the money to the technology.

But could the bitcoin become an alternative to the World Bank system? It's early to say but it has the ingredients. First, it is a very secure system, and in addition, this security is based on the strength of cryptography, not on parallel data networks. Second, it is very economical, since anyone can operate at practically zero cost in Bitcoin and all he has to do is to strongly protect his private keys. Third, it's very fast. And fourth, even if traditional banking decides to stagnate, competitors can use bitcoins to send money between countries at very low cost.

The only obstacle that has now an operator to use blockchain to send money from one site to another is that the operation has to be done in Bitcoins. And now we would be limited to the liquidity of the Bitcoins market in some countries. For example, if a person wants to receive bitcoin from India to the US, he would go to his bank, and the currency exchange would be done according to the banks of each country. If a bank wanted to do that operation in blockchain the home bank would need to buy Bitcoins in India and the target bank to sell Bitcoins in the US, it would require a sufficient market for liquidity at times.

Another possibility is that Bitcoin may not succeed as currency but it does so as a system of sending money. That is, it may not end up being a currency that is used by people but by banks as a reference currency for international transfers.

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