Sunday, 2 July 2017

Bitcoin and BlockChain – Modern FINTECH Bringing Innovation and Speed to International Trade

Since November 2014, travelers around the world can book flights, pay for hotels and even rent cars with CheapAir and pay with bitcoins and enjoy the benefits of anonymity, low cost fees this digital currency brings.

With a click of a button, you scan the payment bar-code with your device or do a manual bitcoin transaction and voila, you are travelling the world.

Bitcoin is gradually putting the traditional banking system out of business with the great improvement it is bringing in international financial transactions.

According to wikipedia, Fintech " is an industry composed of companies that use new technology and innovation with available resources in order to compete in the marketplace of traditional financial institutions and intermediaries in the delivery of financial services. "

Bitcoin has been doing this over these few years in the financial industry.

International trades have increased greatly all because of this new form of "crypto-currency", a digital currency that can be used as an alternative to regular currencies.

More and more outlets have started accepting bitcoin as a type of payment; For example, American Starbucks accept bitcoins, my beloved Fiverr accept bitcoin, and even Overstock does accept it. Many more online stores and companies have followed suit.

What really is bitcoin and blockchain; and how is this technological innovation changing the international trade landscape?

Bitcoin and Blockchain

There are many negative stories around the use of bitcoin like using it for money laundering, for purchasing of illegal drugs, weapons or services.

Not long ago, the New York Times published an article on a prosecution set up for the fight against money laundry using bitcoin.

The digital currency for a long time has also been the most common way to make payment on the now defunct Silk Road, the underground marketplace where illegal drugs, weapons and services are traded.

Bitcoin still suffers from the aftermath of these initial problems. Many know bitcoin for only the negative things associated with it, while the positive potential of bitcoin is often underexposed.

If you dive dipper into bitcoin, you will understand that the monetary aspect of it is just a little bit of the many benefits bitcoin and the blockchain technology has to offer.

It is built to function on the blockchain technology – a manipulation and forgery protected database with a groundbreaking piece of technology.

Using Bitcoin for International trade

Currency exists to facilitate trade. As time goes by, global trade has become enormously complex. To capture all necessities in international trading one has to use the services of intermediaries such as banks, accountants, notaries and governments.

This is where the importance of bitcoins comes into play. Bitcoin is completely decentralized and independent of central banks and governments.

This issue of printing money and causing inflation does not apply in bitcoin, since there is an imposed limit on the number of bitcoins that can be generated - that is 21 million.

If scarcity arise at some point after all bitcoins has been mined, the risk of deflation will be smaller. In addition, transactions are faster because it is not dependent on banks.

Bitcoin transactions takes place almost instantly irrespective of the distance and you pay little to no fees, unlike with traditional banks. Furthermore, it ensures anonymity and the privacy of all bitcoin owners is closely guarded.

The participants in the bitcoin network known as miners monitor all transactions to ensure security and if any transaction appears suspicious, it will be invalid.

Everyone checks the network together and everything is publicly stored in a sort of ledger known as blockchain.

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