THE DECENTRALIZED CENTURY

Rene Ndekwe

African Leadership University

International Business A
01-11-2021
The world is rapidly changing. We went from building bridges to cross the river, rocket ships
to explore the universe, interacting with our local neighbours, and transacting with each other
around the globe. The current financial system doesn't allow us to transact freely due to many
middle entities involved in a single transaction, the gap that cryptocurrencies are trying to
address. With bitcoin or any other cryptocurrency, you can send, receive and trade
internationally in no time and with no hidden fees. In International business, there is nothing
better than a smooth financial transaction or service that satisfies both parties, hence building
a relationship that can benefit each other. Financial services have been very much affected;
Globalization can be defined as the act or state of becoming worldwide in scope or
application. Apart from this geographical application, Globalization can also be defined as
becoming universal. For the financial services industry, this second meaning implies both a
harmonization of rules and a reduction of barriers that will allow for the free flow of capital
and permit all individuals and firms to compete in all markets.

Globalization has had many effects on the financial services industry, including sending
money across borders in minutes. The recent bitcoin surge is an example of how
cryptocurrencies have changed the game, offering financial services not tethered to any state
or institution. Here's how they did it and what you can expect of the future.
What Cryptocurrency Can Offer for Financial Services- Easy Payment Options- The boom in
crypto has led to new payment options not regulated by banks or governments, meaning there
are no requirements on when you need to send your money. This has opened up the
possibility for many new financial services, including remittances.
The rapid rise in cryptocurrency has attracted the attention of governments worldwide.
Financial regulators in China, South Korea, and Russia have all issued warnings or outright
bans on cryptocurrency trading (Orji, 2021). Furthermore, many countries are reassessing
whether to incorporate cryptocurrencies into their current economic systems at all.
Regardless of these factors, there is still intense interest in cryptocurrency among people
around the world. The Central Bank of Nigeria joined a growing list of emerging markets
betting on digital money to cut transaction costs and boost participation in the formal
financial system. "Nigeria has become the first country in Africa and one of the first in the
world to introduce a digital currency to her citizens," President Muhammadu Buhari said in a
televised speech at the launch in Abuja, the capital. "The adoption of the central bank digital
currency and its underlying technology, called blockchain, can increase Nigeria's gross
domestic product by $29 billion over the next ten years" (Onu, 2021). The digital currency is
expected to boost cross-border trade and financial inclusion, make transactions more
efficient, and improve monetary policy, according to the central bank (Onu, 2021).
There are many environmental factors in cryptocurrency mining. One major factor is the cost
of electricity. Mining bitcoins, for example, cost on average $7,200 per coin. So a mining rig
that produces a single bitcoin per month would cost about $890 in electricity alone - not
including premises rental and other overheads! (Aratani, 2021). The rig's efficiency is also a
significant factor in how much it will cost to mine cryptocurrency. The most efficient rigs on
the market can operate at six mega hash per second while consuming only one thousand
watts of power and costing about $700. As you can see, the cost of electricity is a significant
factor.

However, cryptocurrencies do come with several setbacks. The first is their extreme
volatility. Because no government backs cryptocurrencies, they are left to the market forces
of supply and demand. If cryptocurrency holders believe that there is less of a demand for the
currency, then there is an increase in the supply. They will begin selling off their holdings to
lower the price. This makes the exchange rate go down, which negatively affects
international trade because importers or exporters generally use cryptocurrencies as a tool for
risk management rather than as an actual currency.

The issuance of the digital currency, called the eNaira, comes after the central bank, earlier in
February, outlawed banks and financial institutions from transacting or operating in
cryptocurrencies as they posed a threat to the financial system (Onu, 2021). Even the country
that issued the digital currency is still against the cryptocurrency; from my side and the
results, the world is noticing that crypto is going nowhere. El Salvador became the first
country to prove that crypto was the future of financial systems when they adopted bitcoin as
the legal tender currency. It will help African countries to rethink their arguments against this
new era of money.

Some debate that cryptocurrency will negatively reshape the global economy, particularly the
developing countries, removing mediators like banks. They essentially refer to its newness
and lack of trust among a large part of users. Some say the lack of regulation makes it
democratic. On the other hand, cryptocurrency supports financial inclusion in developing
countries at an unmatched rate because of increased transparency during transactions. Due to
its decentralized ledger system, low trade cost, and ability to overcome inflation if someone
decides to hold it as a store of wealth (pal, 2021).
 References

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https://www.ndtv.com/business/can-cryptocurrency-change-the-global-economy-2560

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Onu, E. (2021, 10 25). Nigeria Becomes First African Nation to Introduce Digital Money.

Bloomberg.

https://www.aljazeera.com/economy/2021/10/25/nigeria-becomes-first-african-nation-

to-roll-out-digital-money

Orji, C. (2021, 09 24). Bitcoin ban: These are the countries where crypto is restricted or

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pal, P. (2021, 10 03). Can Cryptocurrency Change The Global Economy? factpatrol.

Retrieved 11 01, 2021, from

https://factpatrol.com/can-cryptocurrency-change-the-global-economy/