The birth of blockchain technology and its quick adaptation have left many people stunned, with famous CEOs, investors, entrepreneurs and financial experts often talking about how it will change the way we go about our daily financial activities.
One of the most important aspects to consider in blockchain technology is how this relatively new technology can help improve globalization — i.e., the process of interaction and integration of people, companies and governments worldwide.
How cryptocurrency transactions can improve globalization
One of the most important things in the global economy is the movement of goods and services. Currencies are used to facilitate these movements, but issues such as high inflation rates and currency manipulation techniques are making a lot of people worried about the validity of traditional currencies.
Immutability could make cryptocurrencies the right tool to facilitate the movement of goods and services. Even though some government officials argue that the speed and network congestion of cryptocurrencies are hindering them from being adopted as a tool for globalization, many projects have started to disprove these assumptions. This is making cryptocurrency a globalization tool that people can trust.
Impact on foreign money transfers
Currently, money transfers are mostly made by banks, which charge an additional fee for processing transactions. High bank fees in international transfers are not the only problem. The time required for the operation can take up to several days, depending on its complexity. Online conversion of cryptocurrency through crypto exchanges is a much simpler process, which entails practically no costs. This is why foreign workers are increasingly relying on Bitcoin (BTC) as a more convenient and less expensive means to send money to their families.
Can crypto exchanges help globalization?
We can’t talk about globalization through cryptocurrencies without talking about cryptocurrency exchanges. Cointelegraph reported earlier that nearly $10 billion in Bitcoin is now being stored on cryptocurrency exchanges. Exchanges are considered by many crypto users as a tool for cross-border transactions and cryptocurrency conversions.
Cryptocurrency exchanges should discourage the development of projects that do not add value nor help promising projects grow. How? By conducting thorough due diligence before adding the project’s token to their listings. If it cannot enter an exchange, the project’s token is essentially dead — or else it can only serve the internal needs of the project’s platform.
Ethan Ng, the CEO of Singaporean crypto exchange BiKi, told Cointelegraph that exchanges must help the project they take onboard grow by providing it with the necessary tools and by introducing it to the market. He continued:
“Before taking responsibility for the development of the project, the exchange should conduct the most thorough analysis of it. We launched BiKi in August 2018, at the peak of the bear market, when it finally became clear that the ICO era had come to an end, so we filled the niche that has formed at that time in the crypto market — it was quite necessary to know how to launch tokens correctly so that they could enter the global market, how to conduct a PR campaign, and manage the community. We introduce the projects to the Chinese market first, and then with our help, it can enter the global market.”
How can blockchain contribute to the globalization of business?
Globalization is unfolding at a tremendous rate due to the flow of digital information. Analysis firm McKinsey & Company recently published a report in which it said that “digital flows — which were practically nonexistent just 15 years ago — now exert a larger impact on GDP growth than the centuries-old trade in goods.”
The flow of information is not limited by borders or national policies, and this is most pronounced in the use of decentralized blockchain technology. The most difficult aspect of managing cross-border transfers is to ensure compliance with the legal frameworks of different countries, each of which has its own unique set of rules, tax code and other legal norms that make it difficult to conduct business between different countries. Blockchain technology, by its nature, is not tied to any nation: As a peer-to-peer technology, the transfer of assets on the blockchain can be freely managed across borders.
The development of blockchain tech allows small businesses to create international companies. In fact, the blockchain erases the boundaries between large and small businesses, giving both the opportunity to appeal to the global community.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Oluwatobi Joel is a U.S.-based freelance copywriter, community manager, blockchain expert and serial entrepreneur. He has worked with various blockchain startups as a marketing strategist.