Financial technologies such as digital currencies are transforming the world. One of the most unexpressed benefits of digital currency is its potential to completely transform the global social landscape.
In general, digital currency has the following benefits:
-Reduced transaction costs
-Ease of person-to-person transactions, or remittances
-Decentralization and increased trust
Each of these aspects has the ability to completely transform not only the global financial community, but the manner in which individuals transact.
At the individual level digital currency allows for the transfer of funds without the typical intermediary of a bank or other financial institution. This allows for the unbanked of the world (those presently not included in the financial system) to perform financial transactions with other individuals and businesses who accept the same digital currency as a form of payment.
Digital currency also has the benefit of allowing geographically separated individuals to transact directly without the complexity of currency conversion. As mobile e-commerce continues to expand and serve as a global connector in and of itself, digital currencies have the potential to further simply e-commerce transactions and allow for greater reach for individuals shopping online.
Digital currency further empowers individuals by allowing those who were previously unable to take control of their financial affairs to do so. Within The Age of Cryptocurrency, authors Paul Vigna and Michael J. Casey provide an interesting example in the form of of Parisa Ahmadi – a woman in Afghanistan whose life was transformed by bitcoin. Prior to bitcoin, Parisa Ahmadi was extremely limited in her ability to financially transact with others directly as it was unacceptable for women in Afghanistan to do so, and money was directed through men in their life such as a husband, father, or brother. Digital currency removed this limitation within her life and will allow others to do so as well.
Another significant benefit that will allow digital currencies to thrive in the developing world is the lack of required infrastructure. Digital currencies have the potential to flourish in developing countries where the lack of a traditional banking infrastructure greatly reduced the flow of money. The potential is similar to when countries in Africa leapfrogged lanline technology and went directly to mobile phones.
A digital currency has the potential to be the first global currency, either through bitcoin, or some alternative cryptocurrency. Further, digital currency has the potential to transform the world through reduced transaction costs, easy person-to-person transactions, and increased trust through decentralization.