The implications of cryptocurrency on the global economy

[TheUltraElite]

The use of cryptocurrency is has increase over the years as many people now see crypto as an alternative to the fiat. My question is if the government legalize cryptocurrencies are means of payment, what will be the implications on the global economy?

Crypto is an addition to fiat not an alternative. For being an alternative, majority of merchants would have to start accepting it, that stage is far from our reach at present. Since you are in this forum with bitcoin-users it might seem that crypto is popular, but come to the reality, in most countries you will rarely come across a bitcoin user in the day to day life.

Governments have not legalized crypto in many countries yet, so it is hard to predict - but considering the model on which bitcoin is created, it will be for the good, inflation should reduce and corruption/bribes should also stop.

[Pmalek]

I don't see it. For something like that to work, crypto would have to be completely regulated. No anonymous addresses and anonymous sending. The world's biggest countries don't want to take their chances and gamble with something they can't completely control. Making Bitcoin legal tender would affect the position and strength of their national fiat currencies.

And Bitcoin wouldn't even be able to sustain such an enormous influx of new users. Imagine what that would do to transaction fees when millions of new users start using it. Instead of 5-10k of unconfirmed transactions, which is a high number by itself, we could be looking at millions instead. And then that situation would have the opposite effect on people. Why would I want to use Bitcoin to make my purchase if I have to pay at least $30 in fees if I don't want to have my transaction stuck in the mempool for days?

[uneng]

It will depend on how the regulations are going to be made by authorities. The impact can be a more decentralized global economy, in case governments respect the individuals, or the impact can be a more centralized global economy similar to the currently one, if regulators decide to go through the bureaucratic and oppressive route.
The implications will continue being a mistery for us until they happen for real. All we can do is to speculate and to hope the best is going to be done from the average adopter or citizen's point of view.

[GiftedMAN]

Even if a government legalizes cryptocurrency, they will not promote it. They will only focus on their fiat. Also, they will most probably create a separate tax class for cryptos and then impose heavy taxes on them. Overall, a government will never encourage its citizens to use an alternative currency over their currency. Exceptions are there but that will remain as an exception only.

This is true and I agree with you. Using the government of my country as an example, their reason for not legalizing cryptocurrency has always been our local fiat currency this is because they believe that citizens will abandon the use of the fiat if Bitcoin is accepted as a means of payments in my country. Moreover, if they should legalize cryptocurrency, people who make use of it will be overtaxed just as you said and no doubt citizens will be forced to continue using their Local fiat currency since they won't encounter much tax on the use of it for payment of goods and services.

[Cryptomultiplier]

I was just thinking about how to compose an essay with money and government as the major talking points when this topic caught my attention. 'Keeping them poor, keeps them controlled'; is a paradigm to express how most governments work. If this is no longer available, then they find ways to get back the control.
Since cryptocurrency has brought light as an alternative to fiat, which is easily regulated by central banks and government policies, the poor have an opportunity for better living via yields from crypto investment. Imagine legalizing it around the world, governments fear their systems might crumble, hence one of the reasons I believe they want to impose tax and regulate the free use of crypto currency for transactions.

[suzanne5223]

The use of cryptocurrency is has increase over the years as many people now see crypto as an alternative to the fiat. My question is if the government legalize cryptocurrencies are means of payment, what will be the implications on the global economy?

You said it yourself that crypto was seen as an alternative to the fiat currency. Technically, it was created as a compliment to fiat not to dethrone or make fiat obsolete because crypto bridged the gap in border to border transactions.
Therefore, there won't be any form implications on the global economy. It's just the government hate the citizen having liberation and I'm sure if Bitcoin is centralized it will be already legalized globally as we speak.

[Gyfts]

The use of cryptocurrency is has increase over the years as many people now see crypto as an alternative to the fiat. My question is if the government legalize cryptocurrencies are means of payment, what will be the implications on the global economy?

There isn't a global authority that cracks down on crypto usage, and most countries today with large economies already allow crypto as a means of payment. Bitcoin is already a portion of the global economy, albeit not very large compared with other assets.

My question is if the government legalize cryptocurrencies are means of payment, what will be the implications on the global economy?

Governments already have CBDC and they will be much more amenable to rejecting cryptocurrencies that are beyond their reach. Because governments don't want to take further risks when control is not with them. The government owns the banks and the position of the banks is not to like cryptocurrencies at all which always makes them lose the profits from the taxes created. The habit of escaping taxes to crypto is the only thing that has until now been the reason why CBDC was created.

CBDC's aren't in mainstream usage right now, they're not a factor that's contributable to a country's economy that I've seen, and they're certainly not a player in the global economy.

[TheNineClub]

The global economy is much more  intricate than just the minetary side of it, and even with that, crypto will only be one of the options, not the only option. So the impact on economy in general won't be much. In time it could make some things shift around, but givernment acceptance dosen't equate to usage by people, and that's what moves the needle the most.

[Dissimulate]

Firstly, Governments will not legalise the use of cryptos fully. Though in many countries cryptocurrencies are legal to use, there are limitations like taxes.
One or two countries adopting cryptos will not impact the world’s economy much.

[TheUltraElite]

The global economy is much more  intricate than just the minetary side of it, and even with that, crypto will only be one of the options, not the only option. So the impact on economy in general won't be much. In time it could make some things shift around, but givernment acceptance dosen't equate to usage by people, and that's what moves the needle the most.

Government acceptance might improve the usage of the crypto but this happening in the right place and right time is having low probability. Using crypto currency will not make every person rich so this should be kept out the picture, only difference is the easy use and decentralisation.

If more companies push governments then it will become a possibility but this will happen gradually not rapidly. With the continuous negative outlook of certain groups towards crypto the path is difficult but possible to overcome.