Who Benefits From Crypto?
Everybody’s been talking about cryptocurrencies lately, and with numerous governments looking into issuing central bank digital currencies, people are starting to wonder – what’s so good about this? Who will benefit from it? In short, everyone. And here’s how.
The entire crypto community believes that cryptocurrencies have the potential to change the world for the better. At first glance, however, when you check out what cryptocurrencies are and how they’re used at the moment, it can be a bit tough to determine who, besides traders and crypto companies, can benefit from them.
I mean, sure, it’s easy to say – you can HODL.
It’s easy to say – this is apolitical money.
Even easier to say – it’s a technological advancement.
But, crypto doesn’t exist in its own bubble. People need to start using it in order for it to become more relevant. Companies need to have good enough of a reason to implement it, so it would continue developing.. And finally, governments need to regulate it, in order for crypto to avoid being connected to illicit operations.
Now, that’s what the crypto industry needs, but, why would it happen?
So, let’s first delve into the biggest question – how can governments benefit from cryptocurrencies?
Or, more simply put – reasons for countries to bring positive regulations regarding crypto.
Brings in companies
Regulating cryptocurrencies and allowing businesses to accept them as a manner of payment brings in crypto-oriented businesses, which are multiplying by the month. At the moment, there are more than 500 crypto exchanges, over 5100 cryptocurrencies, and more than 20 thousand markets. In 2018, there were about 1600 cryptocurrencies and 200 exchanges. Each of these companies had to be incorporated in a crypto-friendly country, and pay its taxes there. Along with these, thousands of other crypto-oriented businesses have opened, and they tend to settle in crypto-friendly countries.
Increases tax revenue
Crypto-friendly regulation brings in revenue through businesses that set up shop in a country that regulates their industry well and provides some perks. The simplest proof of this is that Binance – one of the largest crypto exchanges in the world – opened a new branch in Turkey, along with a new chapter in that country’s use of cryptocurrency – and it’s all because of that country’s crypto-friendly status. Any country that can attract Binance to open a branch will receive a handsome tax income revenue. In the first 3 months from the inception of Binance, its profits amounted to $7,500,000 USD. In the 2nd quarter, profits amounted to $200,000,000 USD. The numbers have only been growing since, plus, that’s just one exchange. Growing exchanges are also recruiting aggressively.
Creates jobs for citizens
Crypto businesses are well funded. In 2017, crypto businesses raised $5.7 billion USD from ICOs, more than VC investments brought in in the same year. In the first two months of 2018, crypto businesses raised more than $2 billion USD, and the trend has only been accelerating since. These businesses must hire people to grow their teams, creating job opportunities in the local community.
If a country decides to develop and issue a central bank digital currency, that move can allow it to battle inflation more effectively. Pegging a country’s cryptocurrrency’s value to a stable and independent store of value, such as the MMU that reflects the growth of the global economy, allows a country not just to prevent the impact of inflation on its citizens’ holdings, but also to stay ahead of the curve.
Easier online transactions
Blockchain-based currencies provide an open source solution to financial infrastructure. It makes money transfers, payments, and tracking transactions much easier and more transparent.
Easier currency exchange
Countries implementing blockchain-based financial solutions have cited ease of exchange as a major reason. For an enterprise or trading partner, setting up banking relations in most countries can be a nightmare. The challenges of currency exchange and payment processing make international companies less likely to do business in countries with smaller economies. Digital currencies could change that by making exchange simple, standardized, and completely online.
Appreciation of a nation’s currency
A country that gets its national coin listed on a major exchange is likely to see that coin’s value grow. With enough growth, that digital currency could contribute to reducing the national debt in many countries.
Going cashless and lowering costs while increasing revenue
For many countries, the ultimate goal of a central bank digital currency is to go cashless. The People’s Bank of China has expressed such an interest with their explorations into a national digital currency. So have Israel, Dubai, and Japan with their various currencies meant to be accessible via a mobile app for payments anywhere. That means that while the country’s expense of maintaining currency supply goes down, the transaction costs ensure that the country makes a profit on each transaction. And although millions and millions of people are unbanked, use cases around the world have shown that they would grasp at the opportunity of going cashless through crypto.
Fight against corruption
In developing nations, misappropriation of state funds by corrupt government officials is a big problem. Nonadherence to the best practices of project contracting usually results in capital projects being handled by groups who divert state funds for their own personal interests. The use of cryptocurrencies, especially those built upon smart contract protocols will allow for a more transparent contract system. With records on the blockchain, keeping track of a country’s funds and how they’re being utilized has never been easier.
In my opinion, Sweden’s case is one of the best examples of how an entire country can benefit from crypto.
Sweden’s share of European FinTech deals climbed from 8 percent in 2016 to 12 percent in 2017, part of what Stockholm FinTech Hub founder Matt Argent calls a “seismic shift” in activity within FinTech in Sweden since the hub launched in February 2017.
“The country’s tech unicorns are putting the country on the map as a viable destination for investment and this is influencing the FinTech sector,” he adds. “Swedish FinTech has attracted EUR 776 million in total funding, which translates to 279.38 percent average revenue growth, across 226 organizations employing 3038 employees – not bad going for a country of only 10 million inhabitants.”
Ok, that’s clear. But, how can companies that aren’t in the crypto industry benefit from crypto?
Or, why would a non-crypto business want to use a crypto solution or a cryptocurrency?
Simple and straightforward, blockchain transactions make the days of paperwork, brokerage fees, commissions and special conditions numbered. Now, even in traditional business dealings, transactions can be done quickly through peer-to-peer networking structures, with less confusion, and more accountability. Not to mention that crypto transfers are way cheaper than standard bank transfers.
Transactions via cash/credit systems are not simply sending funds from one party to another. Companies are sending much more through the wire, sometimes transmitting a lot more than they would share willingly. This opens businesses up for account or identity theft. On the other hand, blockchain transactions safeguard info, decreasing security risks.
Improved ownership structure
In traditional banking, you give the power over your funds to a third party that can then basically do as it pleases with them. Cryptocurrencies don’t work like that. Businesses have the sole ownership over their private and public encryption keys that make up their crypto network identity.
Crypto is adaptable
There are more than 5100 cryptocurrencies in the world at the moment of writing. Although many are strange and difficult to comprehend, numerous have been made with a specific use case in mind – from marketing platforms, over contract management, to solar power distribution networks – which means that crypto is flexible enough to meet any business’ needs.
When it comes to crypto, security is usually in the first place. In order for anyone to be able to put their trust in a digital currency, it has to be perfectly secure on both the sender and the recipient side. That’s why for crypto transactions, there are no chargebacks – so fraud is avoided, while the encryption techniques used on blockchain throughout transactions safeguard against account tampering.
And finally, how can individuals benefit from crypto?
Or, why should I care about all of this.
No need to trust a bank
In a time when banks are far from being trusted pillars that assist the community, we need a solid replacement. Cryptocurrencies to the rescue! Jokes aside, cryptocurrencies usually don’t have a need to rely on centralized intermediaries, which means they aren’t susceptible to the same issues. You don’t need to trust an institution, or a person. Just trust the code.
With your holdings in a crypto wallet, and your contracts smart, you don’t have to worry about credit card fraud, and someone draining your accounts. Make sure to use crypto wallets with at least 2FA, and you’ll be good to go.
Cheap and fast payments worldwide
The days of waiting for days for your cash are coming to an end. Crypto-based remittance solutions are making these transfers almost instant, and lowering transaction fees to the point where they are nearly imperceptible.
You don’t have to own a bank account
Yep, you’ve read that one right. Approximately 2 billion people in the world don’t have a bank account. But, many of them have a mobile phone, and with crypto, they can carry out financial transactions without a bank account, just via biometrics and their mobile device.
You can invest in promising projects without limitations
You want to invest a bit of your savings, but don’t want to depend on an investment banker or advisor? Crypto can help here. Find a cryptocurrency or a crypto solution that’s performing well, and that you believe in, and invest. You can start with $5, no one will say it isn’t enough, as you’re always able to purchase crypto in fractions.
You can save the value of your holdings
When you notice global turmoil and sense an incoming inflation increase, or global financial crisis, you can hedge in crypto, and save the value of what you have earned.
Disclaimer: The information provided in this post is not legal, accounting, or financial advice. I am not a lawyer, accountant, or financial advisor. I am not registered as an investment adviser with any federal or state regulatory agency. The Information should not be construed as investment or trading advice and is not meant to be a solicitation or recommendation to buy, sell, or hold any cryptocurrencies.
Title photo by Ali Yahya, Unsplash.