Cryptocurrencies and their influence on the world economy

• Contents

WHAT IS CRYPTOCURRENCY?

Bitcoin was the first implementation of the cryptocurrency concept, conceived by Satoshi Nakamoto, whose objective was to form a system of reliable electronic transactions, without the mediation of third parties to perform the reliability of this process, that is, without the presence of banks.

The idea was based on the Blockchain system, by which the transactions made are recorded and do not present the need for a bank to validate or protect the data of those involved.

The adoption of Bitcoin certainly generates empowerment of the individual in the face of these institutions. Because it is a decentralized system, since each computer on the network has the entirety of the software, it is practically impossible for a government to prevent its operation, because as long as there are two computers in the world connected to the internet, the blockchain can work.

CRYPTOCURRENCY IN DEVELOPING COUNTRIES

The creation of cryptocurrencies ended up facilitating the movement of coins in and out of the limits of countries that exercise greater control over capital, such as Cyprus and Russia, especially in times of financial crisis.

Banks do not have the ability to impose restrictions on their movement. Thus, they become facilitators for holding dollars or other currencies with greater stability when compared to the country's local currency, since developing countries usually have currencies with a greater degree of volatility. In addition, virtual money encourages innovation in the financial market, opening several possibilities for developing countries.

CRYPTOCURRENCY IN DEVELOPED COUNTRIES

Developed countries that avoid strict capital controls maintain a more neutral stance towards virtual currencies, following the development of the sector and studying its effects.

Governments that have a more rigid financial system are moving towards the regulation of cryptocurrencies, however, the acceptance of virtual money undermines measures that can affect the exchanges carried out.

CENTRAL BANK OF BRAZIL AND IMF

In 2017, the Central Bank of Brazil (BCB) published a note declaring that even though virtual currencies are the subject of international debates, it does not identify the need for regulation or risk to the National Financial System. However, the BCB follows the evolution of these currencies and the international discussions on the subject in case it adopts any control measures in the future.

The IMF, on the other hand, when commenting on the subject in its report, listed four risks related to crypto-assets and their impacts on the world economy. These are: risks of integrating crypto assets into financial products; risk to the bank's business model; risk of crisis transmission and risk of money laundering and terrorism. The Authority concluded that virtual currencies do not present an immediate danger even mentioning these risks.

FOREIGN TRADE

In Brazil, since August 2019, it has been mandatory to provide information to the IRS on purchase and sale operations involving virtual currencies (cryptocurrencies or crypto assets). The rules for this rendering of accounts are defined in Normative Instruction RFB 1.888/2019. Information about each transaction must be recorded monthly.

Global adherence to the blockchain as a tool in foreign trade is still in its infancy, however, the number of organizations that adhere to it is consolidated daily. The advantages offered by this technology make it clear that global adherence is just a matter of time. We list a few below:

• Radical reduction in the use of paper;

• Reduction of rework in document control by all parties involved;

• Reduction of errors by reprocessing information;

• Reduction in the need for intermediary agents in financial operations;

• Agility in international payment processes.

All these benefits point to the solution to the two main logistical bottlenecks in foreign trade operations: time and money.

Blockchain is revolutionizing foreign trade and those who work in this area will soon have to live with this new reality.

According to Citi Bank, Bitcoin could play a big role in international trade in a few years. The virtual currency has the potential to become the currency of international trade due to its facilities such as global reach, agility and neutrality.

In its report, Citi shows the evolution of currency initially used as a means of payment and today as a store of value. However, the bank warns that there are challenges to be overcome, such as scalability, capital efficiency and insurance.

INTERNATIONAL OPPORTUNITIES

To know everything that happens in the world of foreign trade, be part of the largest online B2B business platform in Latin America. In addition to providing content specially developed for companies that want to grow their international business, B2Brazil has 200,000 registered companies from all over the world, ready to transact.

Discover the best solutions to reach new markets and obtain international partnerships!