Lovisa Alvin

www.examiner.com - Writer
San Diego, New York

    Description Of Cyptocurrency In Economic Terms

    December 10, 2014

    Cryptocurrency is a medium of exchange using the cryptographic techniques to secure the transactions and to control the creation of new units. The digital currencies in the name of cryptocurrencies are a subset of alternative currencies and the first decentralized unit under it is bitcoin. The additional facility provided by the cryptocurrencies in addition to the global currencies is the recordings made in a ledger to take account on the transactions. And this will help the economists to follow the rate of transactions in accordance with the global trade.

    Various forms of cryptocurrencies

    Similar to globally accepted real currencies, the cryptocurrencies are taking additional forms with different features. The purpose behind this is to balance the domestic trade factors in addition to international credit control. The central bank representatives have stated that the adoption of cryptocurrencies is posing a significant challenge to central banks’ ability to influence the price of credit for the whole economy. Gareth Murphy, a senior central banking officer has stated that the widespread use of cyptocurrency would also make it more difficult for statistical agencies to gather data on economic activity. In addition a caution was stated that the virtual currencies are posing a new challenge to central banks, control over the important functions of monetary exchange rate policy. Despite of all these Dogecoin, Robocoin and Paycoin are considered to play an important role in retaining the credit price of the whole economy. However, companies and governments cannot produce units of cryptocurrency and as such, have not so far provided any backing authority to firms, banks or corporate entities. Within the cryptocurrency systems, the safety, integrity and balance of ledgers is maintained by the community of miners. And hence the security of the cryptocurrency ledgers is completely laid under the miners’ majority preference.  

    Cyptocurrency as a boon to economy

    Since hundreds of cryptocurrency specifications exist now, more importantly the decentralized form of economy in terms of virtual currency now occupied the market. Most of the cryptocurrencies are designed to gradually decrease the production of currency thy placing an ultimate cap on the total amount of currency in circulation. All these measures are taken to control the money flow in market with recorded transactions. By making the records possible, the cyptocurrency will provide a clear and time-bound cash transactions with well-maintained asset control. The economists are supporting this virtual currency as it plays an important role in regulating the economic appreciations and depreciations with much better handling of inflation. The transparent record given by the virtual currencies can be compared with the ordinary currencies which act as the best source for economic predictions. But still the controversies over the misuse of cryptocurrency have also led to restrictions in certain countries. And in Russia the cryptocurrencies are perfectly made legal with an already existing law stated that any kind of purchase with currency other than Russian Ruble is made illegal. The virtual currencies are thus considered as economic friendly with effective regulations thus placing a stable environment in global market. This made the global economists to trace the market transactions and to predict the real inflation rates thus to retain the stability.

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