1. Cryptocurrency

The Impact of Cryptocurrencies on the Global Economy

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Blockchain technology is only now beginning to be widely used as a tool in international trade. Yet given the benefits this technology provides, it is obvious that widespread adoption is really a question of time.

What are Cryptocurrencies?

Bitcoin was the first implementation of the cryptocurrency concept, conceived by Satoshi Nakamoto, whose objective was to form a reliable electronic transaction system, without the mediation of third parties to make this process reliable, that is, without the presence of banks.

The idea was based on the Blockchain system, through which the transactions carried out are registered and do not present the need for a bank to validate or protect the data of those involved.

The adoption of Bitcoin certainly generates an empowerment of the individual in front of these institutions. It is very hard for a government to stop the blockchain from operating since it is a decentralised system with all the software on each computer in the network. The blockchain can function as long as there are two computers connected to the Internet worldwide.

Cryptocurrencies in Developing Countries

In the end, the blockchain development company of cryptocurrencies made it simpler for currencies to enter and exit nations with tighter capital controls, such as Cyprus and Russia, especially during financial crises.

Banks are unable to place limitations on your freedom of movement. Thus, they become facilitators for holding dollars or other currencies with greater stability compared to the local currency of the country, since developing countries tend to have currencies with a higher degree of volatility. In addition, virtual money encourages innovation in the financial market, opening up various possibilities for developing countries.

Cryptocurrencies in Developed Countries

Developed nations with lax capital restrictions have a more ambivalent position towards virtual currencies, monitoring the industry's growth and examining its implications.

Governments with a more rigid financial system are moving towards regulating cryptocurrencies, however, the acceptance of virtual money undermines measures that can affect the exchanges that take place.

Central Bank of Brazil and IMF

In 2017, the Central Bank of Brazil (BCB) published a note stating that although virtual currencies are the subject of international debate, it does not identify the need for regulation or risk for the National Financial System. However, the BCB follows the evolution of these currencies and the international discussions on the subject, in case it adopts any control measure in the future.

Foreign Trade

In Brazil, since August 2019, it is mandatory to provide information to the Federal Revenue Service on purchase and sale operations involving virtual currencies (cryptocurrencies or cryptoactives). The rules for this accountability are defined in Regulatory Instruction RFB 1,888/2019. Each transaction's details must be documented each month.

Global adherence to blockchain as a tool in foreign trade is still incipient; however, the number of organizations that adhere to it is consolidated daily. It is obvious from the benefits provided by this technology that widespread adherence is only a matter of time. We list a few below:

  • Significantly reducing the consumption of paper;
  • A decrease in document control rework by all parties involved;
  • Errors caused by information reprocessing are reduced;
  • Less reliance on intermediate intermediaries in financial transactions;
  • Swiftness in global payment systems.

All these benefits point to the solution to the two main logistics bottlenecks in foreign trade operations: time and money.

Foreign trade is being revolutionised by blockchain development, and individuals who operate in this field soon will have to adapt to this new reality.

Citi Bank predicts that in a few years, Bitcoin will likely have a substantial impact on world trade. Because to features like global reach, agility, and neutrality, virtual money has the potential to replace physical cash as the standard for international trade.

Citi traces the development of the currency from its beginnings as a medium of exchange to its current status as a store of value in its study. The bank does note that there are obstacles to be solved, including those related to scalability, capital efficiency, and insurance.

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