Bitcoin’s implementation into the Economic Systems of Countries around the World and its Challenges

Today cryptocurrencies are more acceptable to the general public and even countries are starting to implement them into the wider landscape.

Cryptocurrency as an official currency represents economic progress but requires caution. The small Central American country of El Salvador became the first country in the world to adopt Bitcoin as its official currency. El Salvador may be the vanguard of the trend to come as many countries are now studying and testing to have their own cryptocurrency.

Coming back to El Salvador, the country was the first in the world to officially adopt Bitcoin as legal tender in its territory. From now on, Salvadorans and institutions can make official transactions using cryptocurrency.

The president of El Salvador, Nayib Bukele, stated that the idea is to increase the dynamism of the economy and make the country more attractive to investors. Furthermore, the president highlighted that Bitcoin will allow Salvadorans living abroad to send money to friends and family in the country in an easier and more practical way. El Salvador relies heavily on remittances from Salvadorans living in other countries so much so that the country’s official currency is the American dollar.

Some other countries are trying to adopt the use of cryptocurrencies although not to the “extent” that the Central American country did, for example in our country, Australia, with many supporting platforms that make it easy for even ordinary people to buy and sell Bitcoin—for example MoonPay, which is the most popular Bitcoin transaction support platform today. With MoonPay, anyone can exchange any amount of their Bitcoin to convert it to AUD. It can be done in just a few simple steps.

The concept of Bitcoin and other cryptocurrencies

The concept of cryptocurrencies emerged in 1998, when Wei Dai, a renowned computer engineer, suggested the use of cryptography to control the issuance and transactions made with a new type of money, which would eliminate the need for the existence of a central authority, such as a private institution or government, as is the case with conventional currencies.

Many financial experts predict that more and more cryptocurrencies will appear on the market, however, for a country’s government, it is important to have control over the monetary base, ease of use, control, and verification of the economy regarding those cryptocurrencies. For larger and more complex economies, currency issuance is part of the government’s monetary policy and is a way to act on the economy.

Implementation issues

In some cases, the implementation of cryptocurrencies is a great advancement for the economy, but in many countries, they are not so easy to use as a means of payment. This is because there are transaction fees, where one has to pay a fraction of the virtual currency in every transaction made. The fees are not as low as, for example, conventional currencies issued by a country’s Central Bank.

Another difficulty for cryptocurrencies, which are far from being adopted as the only official currency of a country, is that internet access is not universal. Digitization of currencies is only possible if there is access to how to store and transact cryptocurrencies, which means having a device, such as a computer or mobile phone, with internet access, “which makes access rather difficult for the lower strata of society”.

Data security

In times of data breaches and increasingly powerful hacker actions, cryptocurrencies seem to be an island of security in cyberspace, as they rely on a technology – known as blockchain – that is highly secure. In addition, other aspects are improved to increase the level of security, and encryption, and reduce energy consumption.

Although it is trending and a secure operation, caution must be exercised, just as in conventional transactions. Just as care is taken in handling bank cards and passwords, care must also be taken with the manner in which the data and access codes for these cryptocurrencies will be stored.

Conclusion

Bitcoin is a form of digital currency and its existence can hardly be denied completely. It and other cryptocurrencies can be an alternative solution for secure and private transactions. However, education about cryptocurrencies and how they work needs to be provided to the general public to prevent them from taking actions that will harm them in the long run. Finally, Bitcoin, like any other form of currency, offers new opportunities for those who want to take advantage of them and at the same time, may hide hidden risks associated with their use.