With the development of computer technology and the Internet, new forms of value have emerged that do not belong to the traditional forms of values that we encounter almost every day. Word is about cryptocurrencies or digital money. Over time, cryptocurrencies are increasingly used, and thus their importance and impact on the economy are growing. No financial or government institution can change the blockchain settings system nor affect payment. The adoption and use of Bitcoin and other currencies are growing out year after year, many consumers as well and business want to take advantage of their increase, its sales, and paid workers.
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What stocks were in the last century, today is a cryptocurrency. Unlike stocks that rising and falling depending on the business of the company, cryptocurrencies oscillate and depend much more often exclusively on the market demand. Today it may be low demand, tomorrow high. It is hard to predict the movement of cryptocurrencies, but from the available examples, it is evident that many of these currencies grow over time.
The impact of cryptocurrencies on banking policies
If cryptocurrencies rule the world, the governments of each country and the central bank will lose their role as intermediaries in the world of economy. The government will not be able to manage inflation in the state, the central bank will not be able to influence the supply and demand of money. States should find new ways of managing the budget, and there could be problems where there will be no state one’s currency, so it is questionable how the state will borrow. By accepting cryptocurrencies, it changes the economy of each country, and they are not currently owned by any bank which does not mean that they will not be in the future. Cryptocurrencies have the potential to become the currencies of the future for the reason that they are not subordinated to any country, are not influenced by government and politics, and liberate market domination by central banks. So far, no central bank has dealt more specifically with the issue of cryptocurrencies and their impact on the stability of the financial system, not only individual countries and the wider area.
In the USA, cryptocurrency is a capital good. The capital good is subject to income tax on the net value of capital gains. To determine the net value, it is necessary to know the exact one market value, for example, bitcoin, expressed in national currency on the day it is virtual currency purchased. If that virtual currency is held for more than a year, it will be considered a long-term investment that is taxed at lower tax rates. A capital loss is deducted from capital gains, and if it exceeds, it can be deducted from “ordinary income” up to $ 3,000 a year. A person who receives virtual currency for a sold good or service must know the market value of that currency expressed in dollars on the day the currency is received. A person who earns their cryptocurrencies by mining as a self-employed person will then be in accordingly and taxable. If an employee receives cryptocurrency as a reward for work done, it will represent a salary in dollar terms. In other countries like Australia, Singapore, the United Kingdom, Slovenia, Austria, and so on, the way of taxation cryptocurrency depends on what transactions the cryptocurrency is used in, whether they are private or business, what is the value of the currency in question, how the currency was acquired, whether it was by buying, mining or receiving a salary.
Cryptocurrencies – new financial instruments
Several governments have tried to gain control of cryptocurrencies, while some are likely to issue and own currencies. Interestingly, many governments have ignored the emergence of cryptocurrencies, all the way up the moment individuals did not become multimillionaires in a short period of their growth values. Many people claim that cryptocurrencies are the ideal way to trade could bring down the classical monetary system. Bitcoin is like a representative of all cryptocurrencies along the way development survived the negative attitudes and attacks that ultimately actually helped his acceptance and affirmation. Bitcoin has attracted many investors and is accepted as a financial instrument. The value of bitcoin is influenced by supply and demands as well as the level of knowledge about the technology at which it is the foundations of cryptocurrency. The advantage of cryptocurrencies over classic currencies is limited offers which are why they are more protected from inflation.
Cryptocurrencies have emerged as a threat to classic currencies and have caused fear among some institutions from the loss of control and power over money. The banking sector felt threatened because the possibility of a quick and easy transfer of money without intermediary commissions has been created. Financial institutions generate large fees based on commissions, and cryptocurrencies do so endanger so it is expected that they will try everything to prevent their survival. Development technology and the acceptance of blockchain systems also lead to the acceptance of cryptocurrencies, and over time, blockchain technology began to be applied to government agencies and large state organizations.
Bitcoin is successful thanks to its amazing technology, precision, and accuracy. As we can see, it is closely related to the economy. With the announcement of the coronavirus pandemic in early February this year, the economy weakened, and with it the cryptocurrency market. Still, the good news is that the situation is slowly improving and that bitcoin is slowly but surely returning to the value it had before. Platforms are evolving every day, becoming more powerful, and competition is growing. As a result, the stakes are getting higher, as more and more people are interested in investing in cryptocurrencies. Finally, we will say that the cryptocurrency market is closely linked to the global economy and mutually influences each other.
Blockchain technology can do a lot, and cryptocurrency can help the global economy, but we can’t say it can solve the world’s problems.