In a world governed by the rules of globalization, attention has significantly turned to investing in Virtual currencies, especially “Bitcoin,” as its price rose crazy; after tweets by a businessman, it has invested about 1.5 billion dollars in “Bitcoin.”
Since the price of Bitcoin exceeded one thousand dollars until it exceeded 58 thousand dollars before it retreated from this level (on February 22, 2021) and fell to less than 53 thousand dollars, and the questions and inquiries do not stop about what these are Currencies and how to trade them.
What are virtual currencies?
Virtual currencies are the product of the technological and informational revolution, and it was successfully born in 2009, and “Bitcoin” was the first currency in digital currencies.
And digital currencies are issued, in a decentralized manner, through mathematical algorithms using computer programs.
Over the past decade, work developed in these currencies. They regulated their trading operations and controlled them through a general ledger of “Blockchain,” which monitors exchanges and knows each account.
This data is available to all dealers through the password and username obtained for the dealer on the network. The category of miners is the backbone of the cryptocurrency market because its members are the ones who create currencies, or what we can call the issuers of digital currencies.
And if Bitcoin was the first currency that was issued among digital currencies, there is a large number of digital currencies. However, it did not gain the momentum of Bitcoin, and among these currencies, for example, Ethereum, Ripple, NEM, and Litecoin (Litecoin), NEO, Dash, and more.
Are virtual currencies a case of spread?
Virtual currencies are still an elite currency or market. Dealing with them is still mainly in speculation while using them as money and as a means of exchange takes a lot of time because dealing with them as a counterpart is still limited.
The countries that have allowed As a means of payment for purchases or others are still restricted. There is an attempt to expand the market for digital currencies, so we found some people demanding that digital currencies be a payment tool for online transactions.
However, there are restrictions imposed by some countries on the circulation of digital currencies, not as a criminalization, but to have their virtual currency, as is the case in India and China, and there is talk about significant companies such as Facebook and others. On the way to issue its digital currencies.
Why is everyone turning to virtual?
Some countries found virtual currencies an opportunity to get rid of the control of the global monetary system, led by America and the dollar, on top of these countries China, and the rest of the countries affected by the US economic and monetary policies, especially after the global financial crisis in 2008.
There is a trend by some individuals, but it is not organized and only reflects the desire of these individuals, calling to encourage dealing in these currencies for those who can absorb their technology and deal with it, to break the American monopoly.
They see that breaking the prestige of the dollar and the existence of an alternative is not subject to the control of states, without a doubt.
The previous divisions may reflect ideological trends or the interests of states. Still, other groups, especially institutions and individuals, are looking for profit, especially since digital currencies are a new market. New markets usually have their early pioneers reaping huge profits, so some seek to gain this advantage.
It is noted that young people are the most popular group in dealing with these currencies, because of their excellent knowledge of technology. On the other hand, their desire to profit quickly to meet their needs and aspire to a better life and access to amenities and enjoyment.
Do these currencies threaten the real economy?
Before the birth of digital currencies and their popularity, the global economy was suffering from high rates of dealing in the financial and monetary economy (stock exchanges, debt purchases, and speculation) exaggeratedly, over the value of the real economy (production and service). Therefore after the global financial crisis in 2008, A call has been made to reconsider financing through the debt mechanism, replace the means of participation in it, create a state of stability, and for real financial and monetary transactions to reflect real economic performance.
The figures published by various media indicate that the digital currency market value ranges from $ 900 billion to about a trillion dollars at best estimates, which represents 1.13% of the value of global GDP in 2019, which is $ 87.8 trillion.
On the other hand, these currencies will have adverse effects on the economic reality of some countries that do not have advanced technological systems for dealing with the owners of these currencies, as tax evasion will be made on these transactions. They will also help exit and enter money without central bank supervision, as the dealings are on. These currencies are both bought and sold online.
Also, dealing in these currencies is nothing more than speculation, and this means the exit of funds that had an opportunity in real investment and job creation from the markets of these countries, especially developing countries, which helps in the spread of unemployment in these countries and the decline of their product and service economy.
Are there laws regulating virtual currencies?
No laws regulate dealing in virtual currencies, neither in terms of the nature of buying or selling or the criminalization of violations in this market.
It is natural for any human dealings to occur, for violations, fraud, or non-fulfillment of obligations. Still, when such violations abound, countries will find themselves obliged to issue laws regulating their work, especially in the countries that have allowed their circulation and dealing with them.
But the issue will be the only time, and after the issuance of the first experience of the digital currency law, the rest of the countries will benefit from it. Its role will be merely to delete, add or amend, but the state of success witnessed by digital currencies may have prompted the issuance of a unified law worldwide.
What is the future of virtual currencies?
Like many matters, it suffers from problems in accepting it, especially in developing countries. Still, with time digital currencies will impose themselves on the world, especially after some significant capitalist economies have succeeded in dealing with and containing them and placing them under the eyes of central banks.
But we are at the beginning of the experience, and perhaps the entry of countries such as India and China and major companies in digital currencies makes us face different results that will upset the global monetary system.