Global Impact of Cryptocurrencies
Cryptocurrencies have made a huge impact on the financial world in recent years. The traditional financial system was shaken and a new asset class emerged. Challenging convention and enabling innovation, these digital assets have changed the financial world in many ways. While many people around the world experience limits in accessing traditional banking systems, with cryptocurrencies, access to financial services has become easier for everyone with an internet connection. Digital wallets and crypto exchanges have given more people around the world access to financial services that they cannot access through banks and financial institutions. It has become a potential tool in combating financial exclusion. Cross-border payments have accelerated and commission costs have fallen. While traditional bank transactions and international transfers can take days or even weeks, with cryptocurrencies these transactions can be completed in minutes. New concepts such as smart contracts, decentralized finance (DeFi), qualified intellectual property (non-fungible tokens, NFTs) were developed in the new ecosystem created by cryptocurrencies. The blockchain method has begun to be used in many areas such as voting and health records.
Cryptocurrencies have become seen as an alternative to protect against high inflation in some countries. Bitcoin, especially called "digital gold", began to be used as a store of value protection against inflation and attracted great interest among investors. With blockchain technology, transactions were recorded transparently. Every transaction has become public and traceable on the blockchain. This situation caused banks and financial institutions to question their functions. However, although crypto technology has many advantages, it also brings potential harms. Since the prices of cryptocurrencies are extremely volatile, there have been large losses or gains in value in a short time. Investing in cryptocurrencies for speculation and investment purposes has exposed investors to great risks. Price fluctuations caused losses to investors. Crypto exchanges became the target of hackers, which led to huge losses.
This has caused environmental impacts as crypto mining operations consume large amounts of energy. Bitcoin mining, in particular, has increased the use of energy resources as it requires large amounts of electrical energy. This damaged energy resources and the environment.
On the other hand, this technology ensured that user identities remained confidential as it enabled transactions to be identified by wallet addresses. This situation has become one of the problems that cause concern for countries. Because cryptocurrencies could be open to the use of illegal activities, dark web sites could also trade illegal goods and services using cryptocurrencies anonymously. This could facilitate the financing of criminal organizations and terrorist groups. The rapid rise of cryptocurrencies has also brought up regulatory issues around the world.
While some countries accept cryptocurrencies, countries such as China, Egypt, Iraq, Morocco, Nepal, Qatar, Bangladesh, Saudi Arabia, Algeria, Bolivia, Afghanistan and India have introduced security and economic regulations to prevent the use of cryptocurrencies for illegal activities and to protect investors. worked. These countries have either completely banned the use of cryptocurrency or imposed restrictions on its use.
Although cryptocurrency technology has achieved a digital transformation and created a global impact, it seems that this development also brings with it some paradoxes. The role of cryptocurrencies in the digital transformation paradox points to a complex picture of the future. According to TripleA data, it is estimated that 4.2% of the world's population uses global cryptocurrency as of May 2023. There are more than 420 million cryptocurrency users worldwide, including 93 million in India, 48 million in the USA, 20 million in Vietnam, 15 million in Pakistan and 4.6 million in Turkey. It is predicted that the use of cryptocurrencies will continue to increase worldwide. The cryptocurrency market is predicted to grow at a compound annual growth rate of 56.4% from 2019 to 2025. The number of companies accepting crypto payments is increasing day by day. It is seen that the use of crypto money is increasing day by day on a sector basis. Cryptocurrency customers spend an average of $250 more per transaction than the average customer. It is estimated that the global luxury goods market will grow from $1.2 trillion to $1.4 trillion in 2025, and millennials will represent 50% of the total market by then. In 2021, 94% of all cryptocurrency holders are under the age of 40.
Luxury brands are accepting cryptocurrencies to create special experiences. Limited edition products can only be purchased using cryptocurrencies. Digital cross-border remittances are estimated to grow to $428 billion in 2025. 15.8% of remitters currently use cryptocurrency to transfer money. Cryptocurrency transfer is 388 times faster and 127 times cheaper than traditional money transfer methods. 25.1% of crypto holders were using cryptocurrencies to shop for online gaming in 2021. The gaming market is expected to reach $340 billion by 2027.
It is certain that 48.6% of cryptocurrency holders will spend cryptocurrency for online gaming in the future. In this uncertainty, it is estimated that cryptocurrencies will be used more by people in the future, countries will control the cryptocurrency market more, blockchain technology will be developed and will find more usage areas, and will transform many industries in the future. Although this transformation brought about by cryptocurrency technology seems to be a transformation that benefits society, it seems that it will become clear over time whether it will provide added value for or against humanity.
