It’s no secret that the economy of most countries is majorly affected by the value of their currency and vice-versa. A dip in the economy can crash the currency into the ground pretty easily and this has happened before in some countries. But what if we add cryptocurrencies to the mix? How do they affect the economy of the countries they are present in and how do the countries react to this?
We’ll go over the impacts cryptocurrencies can have on economies, the reactions countries have had to this, and what this implies for the future of crypto globally.
Can crypto really affect economies?
All currencies are tied to the economies of their countries. Well.. at least all but cryptocurrencies. Since crypto has no borders this doesn’t apply and only something like a war or big crisis can make most cryptocurrencies tank in value somewhat. However, crypto can have an effect on the economy of countries in a few roundabout ways which are interesting to discuss.
Due to the rising popularity of crypto, countries which produce many graphics cards, mining rigs, or related systems have seen a growth in their economies as the demand for these items has grown directly due to the influence of crypto. Crypto can also create new jobs due to this or even increase power production demands which can also impact economies.
While the direct effects of crypto aren’t as big as with fiat money, the sum of all these smaller effects can perhaps rival it. All of these work in conjunction and can either cause economies to suffer slightly or as mentioned with GPU production it can help them grow and expand more than they previously could have due to increased demand for a product they already produce.
How have countries reacted to this?
It varies from country to country vastly. Some have gone scorched earth and banned crypto mining entirely, such as China. Others have greeted cryptocurrencies with open arms and view them as a way to strengthen their economies by being some of the first to be very crypto-friendly. It’s hard to say who’s in the right as both schools of thought have had their ups and downs due to their decisions.
It’s certain that as of now crypto is a big thing and countries investing in it can expect to see good growth come from their crypto-friendliness. Some believe that crypto is just a passing trend and assume that those who have invested in crypto will see a big dip in their economies once this happens, but of course, most people are betting on crypto staying.
I mean sure, nobody is giving out free bitcoins in hopes of their economies growing, but they are trying to create an infrastructure that is capable of supporting the fast growth that we’ve seen crypto go through and keep up for now. If you live in one of these countries and are interested in crypto mining or trading then it’s a great feeling to know that your country has your back in terms of your interests.
It’s certain that crypto has an effect on economies, albeit somewhat indirectly. But due to the sheer size that crypto has grown to it’s almost impossible for it to not affect economies at this point. It’s become one of the biggest things since the IT industry has been created and just as with computers and the internet some are skeptical but others are banking on it becoming an integral part of life and thus preparing their infrastructure.
It’s impossible to say who will be in the right by the end of all of this but we firmly believe that crypto has cemented itself as a staple of the IT industry by now and that it won’t be leaving anytime soon.