The impact of cryptocurrency in the UK has both negative and positive impacts on the economy and the social life of its citizens. Cryptocurrency is still a new venture globally and also for the UK. The Cryptocurrency understanding is still narrow and a few people are interested while some are not interested at all due to its high volatility rates making it a risky financial investment venture.
In the recent past there have been a high number of people developing interest towards cryptocurrency, though many believe that due to its high risk not only in its volatility but also it is not properly secured because of several incidences of cryptocurrency stealing. However, it is soon going to be one of the frontiers in the UK because of the rates of its acceptance especially if the financial institutions embrace its use. The facts about Cryptocurrencies is a little scanty to contemporary society, but in the recent past there has been growing interest on what really cryptocurrency is and how it can be used to improve business performance, this is not limited to private individuals but also leading financial institutions globally.
Many people never believed that cryptocurrency would be anything or end up having an impact in any economy especially the financial sector in the UK. Importantly, we still have a group of people who do not understand what cryptocurrency is, it is imperative to briefly take you through the understanding of what cryptocurrency is and the different types of cryptocurrencies.
In the simplest words possible, cryptocurrency is a digital currency designed to perform the same functions as those of a normal means of the medium of exchange. You would be asking how a transaction can be secured and verified and also control the production of new units by the utilization of a cryptography system, in essence, cryptocurrency is a digital currency. How many types of cryptocurrency are in existence? There are many different types of cryptocurrency, the common type of cryptocurrency are six at the moment including;
- Ethereum classic
- Bitcoin cash
Having mentioned the types and definition of cryptocurrency, it is imperative to note that the digital currency is of late taking shape and people especially of the business class are starting to concentrate on how cryptocurrency works with an aim to explore investment opportunities and business growth.
For your information, cryptocurrency has gained popularity to a point whereby they are now slowly being accepted as the new currencies for investment including payment of day to day bills. For those who mined these digital currencies when they were still new in the market are becoming millionaires, it is anticipated that the currencies that are being used today will soon be replaced by cryptocurrency in the UK.
It has been established that cryptocurrency has possed a different perception of doing business to individuals and the financial institutions, there are impacts that are associated with the introduction of cryptocurrency in the economy of the UK at large. We intend to critically analyze the impact of cryptocurrency in the UK and its economy.
Effects of the cryptocurrency and the legal tender system
Most importantly, the distinction between cryptocurrency and legal tender is that legal tender is acceptable means of measure and store of value while cryptocurrency of any type has not been legally accepted as a means of payment by most governments including the UK.
A compared to the conventional way of handling finance in the market, cryptocurrency has a different way of handling, in other words, cryptocurrency offer a high speed of concluding transactions in general as compared to the normal system of banking, for instance, if a person was buying a property in any part of the UK.
The dealings and the rest of the procedures will take a certain direction to meet the policies of deposits in the banks. Cryptocurrency process does not have queues, banking procedures, and are not held in a bank account but in for of keys online, therefore, it offers a simple and straightforward means of making payments online in a faster means without involving the banks and making them not useful.
For instance, in the case of Bitcoin, it will take you at least less than 10 minutes to complete a transaction and for Ethereum; it will take a transaction less than a minute to complete an online transaction. How does this affect the normal way of doing things? A much as it is known that both the banking and the digital currency procedures are straight forward.
Cryptocurrency is a faster means of payment away from the banks, the UK financial system has to come up with a means that keeps them at par, in other words, the banking industry will have to integrate the cryptocurrency into their system so that they are not kicked out of the industry. Generally, entrepreneurs and other players in the financial sector will start investing in the cryptocurrencies and this will generally involve the banks introducing the services of cryptocurrency in their systems and services.
In most cases, the normal means of doing financial transactions is well known in terms of the people involved, you will know who made a deposit, whose money it is, where it is going and where it came from, for the cryptocurrency systems it is the keys that you see, you are not in a position to understand who exactly initiated a transaction, there is privacy when dealing with cryptocurrency as compared to the conventional way of handling transactions.
The public income, on the other hand, stands a better chance to be increased in the UK since cryptocurrency is a well-paying investment and once converted to hard cash, it will attract high taxes hence improve government income, this will translate to the increase of available income for the government to fund public projects in the entire UK.
The effect of this is that, it will change the whole perception of the business class towards the banking industry and the entire way in which people will be making their investment. Tentatively, most of the people who have idle money in the bank accounts will withdraw the money and invest in any lucrative cryptocurrency of the day because they generate something for them in form of storing their money in the form of Bitcoin and other cryptocurrencies.
Consequently, as it has been experienced in the cryptocurrency sector, they are highly volatile; their prices change to either high or low at any time, and this will bring the entire investment of an individual to be either a profit-making venture or a loss at any time. For those who have mastered how they work, they also believe that there is a possibility of being rich at any time and also there is a high chance of losing the entire investment within minutes.
The effects come in to play in the sense that, the bonds and the securities available today in the market and offered by various financial institutions, they will take time to earn the investor the real value of their investment. For the cryptocurrencies, it gives the investor an opportunity to privacy, their worth is not in the public, and they are directly responsible, there is that independence of handling your financial matters independently without going through an institution like a bank or a brokerage agent.
Entrepreneurs and investors have also believed that the higher the risk the higher the chances of proceeds from the high-risk investment, for instance, if Bitcoin is the most lucrative cryptocurrency, in this case, investors and business people will take their money and buy them, cryptocurrencies are not kept in any bank account as such, this will make the financial institutions to embrace the system because they will lose customers and inflation rates will rise due to low circulation of the legal tender.
In the UK, the entire population has embraced cryptocurrency investment, this basically means that a good number of people are converting their money to cryptocurrencies, if it is assumed that the trend continues, it will be almost clear that the amount of legal tender in circulation will be reduced, once the currencies are not enough for the entire population, it will either be increased by the regulating authorities or left at that point.
The interventions to curb the low circulation of money in the UK, will either devalue or increase the values of the currencies hence the effect, on the other hand, more money can be printed and as such, when the prices of cryptocurrencies go down a lot of investors will withdraw hence increase the amount of currencies in circulation thereby the making the local currency drop its value due to increased circulation. These can have adverse effects on the cost of living in the entire UK region.
Another prominent effect that seems to favor the cryptocurrency system is the ability to transact at any time. In the UK, there are a number of holidays that the banks do not work, during this time; there are no transactions that are done in the bank, therefore a disadvantage to the business class, for cryptocurrencies one can with no restrictions.
something else, in some countries, once you have huge amounts, you have to declare their sources and also confirm to the bank where you are going to invest the money, in the UK this policy is present due to security concerns and to curb money laundering activities, the cryptocurrency system has no restrictions, no one will interrogate anyone hence a platform that offers freedom and independence.
On social grounds, cryptocurrency system of payments are not done human, there is no one that controls the systems. In the UK, if trust is something that is handled with care and sensitivity, then the cryptocurrency is ideal of or the in the sense that most of the people will trust systems rather than human, there are minimal frauds in the cryptocurrency system, there are no possibilities of external influence. This affects the general population to embrace cryptocurrency than the legal tender dealings.
There is a low rate of acceptance of cryptocurrency in the UK, it is for the reason that cryptocurrency has never had a huge impact in the UK, most of the people believe that it is a complex technological venture that demands a lot of technological understanding and also a lot of money to invest in. In this case, many have avoided the cryptocurrency issues until such a time when they are fully knowledgeable on how to transact with cryptocurrency.
For instance, in the UK, 10% of the business class do not understand all the terms used in cryptocurrency, however, involvement in the cryptocurrency field can change the living standards of the citizens of UK, like the process of acquiring the cryptocurrency is known as mining, while the tools used are also believed to be trading strategies, in the foregoing, the involvement of an individual in cryptocurrency is perceived as a venture for the elite, hence not really embraced by many therefore having little or no impact as for now in the UK.
Despite the fact that the interest in digital currency is consistently expanding, the fact is that numerous legislatures in the UK have not given any official endorsement for cryptographic money exchange. Therefore, its utilization is exceptionally restricted to just some particular spaces. Additionally, the digital forms of money are still far from the regular mass to impact the UK economy, however, it is clear that it is taking shape and soon its impacts will be felt in the UK, either to the positive or negative depending on the preparedness of the financial regulators and the government.
Cryptographic forms of money are commonly restricted in number and its exchange scale is completely relying upon its supply. As there are just specific amounts of monetary forms, the conceivable outcome of value reduction is more evident than other financial frameworks.
If there should arise in an occurrence of bitcoin or any other type of cryptocurrency in the UK and in the event that somebody holds the bitcoin for a more extended period, it will steadily decrease the supply rate and in such case, with diminished supply, it will frequently result in a condition of collapse.
Moving past customary money related structures; cryptocurrency system will influence the whole monetary system soon. Blockchain innovation is as of now massively affecting business. With a set up cryptographic forms of money like Bitcoin, there is a safer store of value, doubtless distributed installments and complete personal financial control. Other upcoming digital currencies are having huge effects too in the UK. Past the computerized exchanges, more up to date systems concentrate on aiding the bank sector making blockchain innovation progressively adaptable and giving useful interfaces.
As these and more cryptographic forms of money keep on enhancing the banking sector in the UK, soon our current monetary foundation in the UK will introduce payments via cryptocurrency. One of the essential highlights of Bitcoin and other cryptocurrencies available is that it doesn’t require a mediator or a middleman like conventional money does. As opposed to a bank or other financial institution approving exchanges, all clients of the cryptocurrency confirm transactions in a decentralized manner.
It is a fact that cryptocurrency has given banks sleepless nights, on the grounds that digital currency takes out the requirement for their services making it easier for the business class to complete business easily. Since they don’t need to go through numerous hands, exchanges happen considerably more rapidly. It additionally has caused concern since it’s turned out to be more diligently to manage money-related activities. It is imperative to note that the cryptocurrency system is slowly taking shape in the UK, most of the business people and financial institutions are trying to understand how it works, and soon its integration can be exhibited in the economy.