Cryptocurrencies have gained high prominence in the last few years. The prices of bitcoins are expected to rise more in the next few years. They are known to be better digital alternatives in comparison to fiat currencies. A wide array of countries views cryptocurrency as the next digital money. Cryptocurrencies may be used for circumventing the control of taxes and capitals, leading to enhanced demand among businesses and customers. Cryptocurrencies have turned out to be the prime choice of people in order to control inflation and performing frictionless transactions. Investors are using these currencies as the assets to the diversified portfolios.
What are cryptocurrencies
A cryptocurrency is considered to be a virtual or digital currency which is designed for the medium of exchange. There has been a rise in the usage of cryptocurrencies as they are useful in securing and verifying transactions. They are also useful in the creation of new currency units. With cryptocurrency, encoding becomes really easy whereat deciphering is hard without the key. Thus, it can be said that creating cryptocurrencies are very hard. However, performing transactions is really easy with cryptocurrency.
Cryptocurrencies are recognized to be entries in the pseudo-anonymous and immutable database referred to as the blockchain. Blockchain happens to be a public record which is verified by a plethora of nodes that make the counterfeiting of coins really hard. Thus, it is really challenging to trace the transaction that occurs between individual wallets or accounts.
Effect of technology on the global economy
Bitcoin is now being referred to as the digital silver. It is now coming as the latest market segment for the investment purpose. Bitcoin and silver are known to be different kinds of investments. People are investing more in bitcoins primarily after conducting research on the silver prices today. There was a time when people give more preferences in investing in silver and gold owing to the relative resistance to inflation.
The growth of silver has been found to be less volatile and fairly steady in comparison to Bitcoin. People prefer investing in Bitcoin as they have a higher chance of faster growth. The demand for bitcoins is growing at an exponential rate. All thanks to the cryptocurrency technology, it is more real-time and rapid. As there is no involvement of middlemen, the profits or growths of cryptocurrencies are certainly higher in comparison to oil, silver or gold. At present, bitcoins are considered to be a dynamic form of investment. They are considered to be a conventional safe choice, in comparison to other forms of investment, available in the market.
The market size
For cryptocurrencies to have an impact on the prices of the gold, it is a prerequisite that there should be a shift to bitcoin demand from gold demand. Although cryptocurrency and blockchain offerings are now more common, they are yet to a long way in comparison to the demand for gold. Though the market for silver is large and more established at the current moment, statistics reveal the fact that bitcoin markets on the rapid rise. As there is a growth in the market at a steady rate, the growth of cryptocurrencies is expected to be much higher in the upcoming years.
How cryptocurrencies will have an impact on the silver market in the near future
Bitcoins have a positive flow of money as they are mined and they have monetary bases, which are expanded with each block. For the bitcoins, almost $9 millions of new money are entering daily for matching the new supply. Gold is considered to be the global asset for hedging against the potential market risks.
In accordance with studies, investors are really interested in making investments in Gold. It is recognized to be the mainstream asset dwarfing equities and different similar assets. After taking a closer look into the financial sector, it can be said that bitcoins seem to consume the interest of investors in Gold. If you take a close look at the global picture, the trend may not be clearly visible. As you appreciate the global interest of investors in the gold, which is driven by different countries it indicates that with the passage of time, the cryptocurrency will share the risk asset crown along with silver and Gold.
Although bitcoins now form only twenty percent of the market, it has exponential growth, as compared to silver prices today and the rates are going to enhance in the near future. Bitcoins are now used for different transactions and other emergency use cases.