OPINION: On 26th July, Bloomberg claimed, “Up to Two-Thirds of Bitcoin [BTC] Transactions Have No Economic Value”. In their article, the author explained how they feel that Bitcoin has no economic value and has nothing to do with the purchase and selling of goods and services. It was also remarked that in Ethereum, more than 45% of their transactions had no economic value.
The reality, however, is quite the opposite.
Many transactions on the Bitcoin network, include purchasing of assets using BTC a.k.a. buying and selling of goods using Bitcoin. For example Cheapair.com, an online travel agency accepts BTC as a method of payment for flight bookings.
Many other companies also accept BTC as a mode of payment while rendering goods and services like Microsoft, Reed’s Jewelers, Newegg, Expedia, Overstock.com and Pizza For Coins, a site that delivers pizzas from popular joints.
When an investor is withdrawing the profits they made it adds up to their disposable income which allows them to purchase other goods and services, which eventually contributes to GDP. This is known as the ‘Wealth Effect’, ironically a theory proposed by Bloomberg.
In the context of market manipulation and spoofing, this is true for almost all markets, whether it’s for cryptocurrencies, shares, forex markets, stocks or equity. The number of people who actively participate in market manipulation is according to a lot of market observers, “very less”, which makes its influence on volume very insignificant.
Mining pools disbursing coins to members would eventually lead to the users withdrawing the coins and therefore adding to their income and therefore GDP.
In 2016, Ethereum domain institutions received credits from the Federal government of up to CHF 2.5 billion. Every Franc used directly for business activities of the ETH domain generated not less than 5.4 billion CHF in GVA Switzerland and an average of CHF 6.6 billion around the planet.
During the same year, Ethereum also had 21000 employees and every job that exists in the ETH domain today induces 5 jobs in Switzerland and 6 more jobs in foreign countries. The core contribution of the Ethereum domain according to a recent report creates an average of 20,500 jobs in Switzerland.
To further add, when Ethereum was founded, it was not for the purpose of exchanging economic transaction but function as a decentralized world where systems that link data and documents to a database is stored all over the world and people from any part of the world can access it.
It is the world’s first completely decentralized system consisting of a network of billions of nodes distributed all over the planet and working in complete synchronization. So, the number of economic activities that take place would be very less since economic transactions are only a secondary function for Ethereum.
Ethereum is defined by many as:
“A global database and network of automatically executable and perennially running code, backed by blockchain immutability and network consensus.”
Sources from Ethrat describes that when it comes to tourism:
“Students, friends and family visitors as well as participants in conferences and events of the institutions of the ETH Domain generated an estimated CHF 66 million in GVA and supported almost 700 jobs in Switzerland.”
Cardano, on the other hand, has set their focus on Africa, planning to develop and improve networks thereby establishing an effective and efficient blockchain technology. From improving the biodiversity in Kenya to making a decentralized app that can connect everyone across the continent, there are limitless possibilities as to what Cardano can achieve.
“The lack of transparency on the distributed ledger technology is seen by some industry participants as a hindrance to greater acceptance by both institutional and individual investors, as well as regulators.”
The founding principle for any blockchain or a distributed ledger technology is transparency that exists in every step of the process. Whenever a transaction is made between two parties, the transaction is first confirmed by a network of nodes, after that the transaction is then sent to a mining pool where a group of miners validate the transaction.
Only when the transaction is validated, it is sent to the blockchain. Hence, this would mean that a user can see every step of where the transaction goes, providing complete transparency.
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