I asked the question many times, but NEVER received a reasoned, logical answer. The question is extremely simple: how, and how will the real economy really benefit from the transition to Bitcoin?
Unfortunately, I have to state a fact - many supporters of Bitcoin as the currency on which the economy works, simply do not understand how the economy of countries works, what the central bank is, how the budget is formed, where inflation comes from, and much more ...
The simplest example of misunderstanding: bitcoin will "destroy inflation". Absolute stupidity. Bitcoin itself is indeed a deflationary "currency". But the economy, the economy and the state budget are formed in a completely different way, and a deflationary model is simply not possible in most real situations. Try to simulate and you will understand that the implementation of such a model will instantly lead ... to impoverishment and a drop in living standards, especially for the poor and socially unprotected segments of the population. And it will not solve the problems of the economy ...
In a technical perspective adopting Bitcoin will give the following benefit:
- Financial inclusion - makes it easier for people who are underbanked or unbanked to access financial services.
- Reduced Transaction cost - without the need for intermediaries, international transfers are way too cheaper.
- Improved Security and immutability - with cryptography, transaction are secure and cannot be tampered with reducing the risk of fraud.
- Increased Transparency - since the blockchain that serves as ledger is public, it increase the transparency and accountability of the transaction
- Protection against inflation - with the fixed supply of Bitcoin, it help to protect against inflation by ensuring that the currency value is not eroded overtime
- Decentralization - since Bitcoin operates in a decentralized network , it can provide a certain degree of immunity from the government and central bank financial policies.
and in the contrary it also gives a negative impact in its current situation like:
- Volatility - due to high volatility, it is risky and dificult for businesses to price their goods and services
- Lack of Regulation - due to lack of regulation it is more vulnerable to fraud and money laundering and make the business hard to comply with AML and KYC regulation
- Complexity - this makes it difficult for average person to understand and use.
- Limited Acceptance - at the current state of adoption, Bitcoin is not yet fully adopted making it hard for businesses to accept and consumers to use it.
- Environmental Impact - to secure the network, bitcoin needs miners and consumes a significant amount of energy which can possibly have a negative impact to the environment.
- Legal and Tax Implications - at the current state, Bitcoin is not legal to other countries, and it maybe subject to different regulations and taxes in different jurisdiction which can make it difficult for businesses to operate and for individuals to comply with tax laws.
- Accessibility - people who are not tech-savvy might find it hard to access Bitcoin which can limit Bitcoin's potential to reach wider audience.
- Digital Divide - to access Bitcoin network, people need an internet which make it difficult for people without reliable internet smartphones or laptops to participate in the economy.
So basically government are hesitant to adopt Bitcoin and cryptocurrency because of the possible negative implication it gives since the regulatory framework for Bitcoin and other cryptocurrency are yet to be formed.
We have seen on the pros and cons that Bitcoin at its current state is more likely inclined with individual/group benefits that is not regulatory compatible while the negative impact happens when used to business that requires government regulation. And due to the need of internet and technical knowledge it will be bothersome to people who are not tech-savvy and have poor access to internet.
I might say at the current state of technology and internet propagation, the world isn't ready yet to embrace Bitcoin in full or shift to digital currency, only few countries can provide the needed requirement for Bitcoin to fully operates.
Sources:
https://www.sofi.com/learn/content/benefits-of-crypto/#:~:text=Transactional%20freedom%2C%20security%2C%20and%20ease,widespread%20use%20or%20adoption%20yet.
https://www.fool.com/investing/stock-market/market-sectors/financials/cryptocurrency-stocks/benefits-of-cryptocurrency/https://cs.stanford.edu/people/eroberts/cs181/projects/2010-11/DigitalCurrencies/disadvantages/index.htmlhttps://www.investopedia.com/terms/c/cryptocurrency.aspFinancial Inclusion – Facilitates access to financial services for people who are unbanked or unbanked.
>> Well, to be honest, a controversial argument. It's hard to imagine where it could be? In very poor countries? So a person does not have deeng either on a computer or on a hardware wallet. If a person with a bad credit history / a scammer - so he will "throw" them into bitcoins ...
Reducing the cost of the transaction - without intermediaries, international transfers are too cheap.
>> also a moot point. With Visa Platnum, I don’t have commissions at all, while excellent leverage with 55 days at 0 rate, and installments for purchases up to 24 months with an installment cost of up to 1% for 24 months
Improved security and immutability - thanks to cryptography, transactions are protected and cannot be forged, which reduces the risk of fraud.
>>This technology is already being used both in the financial sector and, for example, in noarial offices. But in relation to real transactions and money.
Increased Transparency – Since the blockchain serving as the ledger is public, this increases the transparency and accountability of the transaction.
>> So here 90% scream for anonymity and "I won't show my transactions to anyone!!!!"
Inflation Protection - With a fixed supply of bitcoins, this helps protect against inflation by ensuring that the value of the currency does not decline over time.
>> Do you recall the story about the course of 18,000 dollars and then 3,000 for 1 bitcoin?
And then 90% of home users leaked it for 3000-6000, and then bought it again for 60.000
))
Decentralization – Because Bitcoin runs on a decentralized network, it can provide a certain degree of immunity from government and central bank financial policy.
>> If you live in a state, there will be no pseudo-currencies UNGOVERNED by the state. The Western world will definitely not allow it. And for example, such "fighters against capitalism" as North Korea and the like - generally introduce TOTAL control over their citizens. Where is the place for decentralization and immunity?
Understand - no state will ever use a currency that they cannot fully control. You just do not quite understand how the state and monetary policy work. don't be offended...
I will explain with an example - explain to me how, with bitcoin instead of the national currency, for example, such a problem will be solved: the global financial crisis or a pandemic like Covid-19 - how will you provide social financial support without "printing money"? Describe the process, in a non-inflationary model, with a fall in industrial production, tax revenues and other things, but in compliance with "fairness" and the payment of pensions, salaries, the organization of medical care and financial assistance to those in need and victims?
