Bitcoin the Cryptocurrency: Stimulating Global Economic Growth

1742 WordsJun 25, 20187 Pages
Bitcoin the Cryptocurrency: Stimulating Global Economic Growth Bitcoin is a form of digital currency that is similar to physical cash stored in a digital form. It is the first fully implemented cryptocurrency protocol utilizing an open source peer-to-peer payment system. As a transfer protocol, it fundamentally functions as a money transfer medium that sends bitcoins from user to user without the need of a third-party intermediary and the system is protected by peer-reviewed cryptographic algorithms. This cryptographic digital currency simultaneously provides users a method to exchange money for free or a nominal fee, which is mutually beneficial for retailers and consumers. The main concern is that it can be used for illegal activities…show more content…
As a result, these retailers often pass the cost onto the consumers. Bitcoin helps tackle the problem, not only by lowering the transaction fee, but also by splitting it between the consumer and the retailer. Retailers accepting Bitcoin can immediately convert it to dollars and the transactions either occur with no fees or very low fees (down to fractions of pennies) which lead to higher profit margins. This should be partially reflected in a decrease in the cost of the goods purchased with bitcoins. For consumers, it means faster payments than cash, credit, and debit transactions. Paying with bitcoins also spares the consumer possible ATM transaction fees. Bitcoin’s transactions either occur with no fees or very low fees (down to fractions of pennies). Bitcoin has also positively impacted international remittance. The money is currently handled by several intermediaries “banks, wire services, and currency exchanges all take their cut. A recent report by BusinessWeek noted that the average fee for remittances was 9 percent of the money transferred, with conversion to cash often costing an extra 5 percent. Western Union's profit margins are enormous for an intermediary, nearly 16 percent, and most of its costs are devoted to the technologies moving money from one place to another, guaranteeing the legitimacy of the transfer. In short, Western Union spends and earns billions to do what Bitcoin does for free”

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