Brexit on Trade

This is an abstract of a report I wrote in late 2017 predicting the impact of BREXIT on Trade. It deals with how BREXIT will impact UK-Europe trade relationships as well as UK's relationships with the rest of the world.

IMPACT OF BREXIT ON TRADE IN UNITED KINGDOM

Contents

1. OBJECTIVE
2. INTRODUCTION
• What is Brexit?
• Why is Britain leaving the European Union?
• What changed in the Government after the referendum?
• What has happened to the UK economy since the Brexit vote?
• What is the European Union?
• What is the single market?
3. Trade Situation
4. How will Brexit affect trade in Britain?
5. Striking trade deals with other big economies
6. Conclusion
• Personal Views
• Experience Gained from doing this Project

OBJECTIVE

This project is a humble effort to study the trade situation and the effect of Brexit on trade in UK. Brexit is a historic event, where Great Britain has decided to withdraw from one of the World’s finest trade deals by the European Union. This project will study if Brexit will benefit trade in UK or not.

INTRODUCTION

What is Brexit?

Brexit is the popular term for the prospective withdrawal of the United Kingdom (UK) from the European Union (EU). It is a word that has become used as a shorthand way of saying the UK leaving the EU - merging the words Britain and exit to get Brexit, in a same way as a possible Greek exit from the euro was dubbed Grexit in the past.

Why is Britain leaving the European Union?

A referendum - a vote in which everyone  of voting age can take part - was held on Thursday 23 June, 2016, to decide whether the UK should leave or remain in the European Union. Leave won by 51.9% to 48.1%. The referendum turnout was 71.8%, with more than 30 million people voting.

What changed in government after the referendum?

Britain got a new Prime Minister - Theresa May. The former home secretary took over from David Cameron, who announced he was resigning on the day he lost the referendum. Theresa May was against Brexit during the referendum campaign but is now in favour of it because she says it is what the British people want. Her key message has been that "Brexit means Brexit" and she triggered the two year process of leaving the EU on 29 March. She set out her negotiating goals in a letter to the EU council president Donald Tusk.

What happened to the UK economy since the Brexit vote?

David Cameron, his Chancellor George Osborne and many other senior figures who wanted to stay in the EU predicted an immediate economic crisis if the UK voted to leave and it is true that the pound slumped the day after the referendum - and remains around 10% lower against the dollar and 15% down against the euro.
But predictions of immediate doom were wrong, with the UK economy estimated to have grown 1.8% in 2016, second only to Germany's 1.9% among the world's G7 leading industrialised nations. UK growth has slowed so far in 2017, but the economy is still expanding. Inflation has risen since June 2016 to stand at 2.6%, but unemployment has continued to fall, to stand at a 42 year low of 4.4%. Annual house price increases have fallen from 9.4% in June 2016 but were still at an inflation-beating 4.7% in the year to May 2017, according to official ONS figures.

What is the European Union?

The European Union - often known as the EU - is an economic and political partnership involving 28 European countries. It began after World War Two to foster economic co-operation, with the idea that countries which trade together are more likely to avoid going to war with each other.
It has since grown to become a "single market" allowing goods and people to move around, basically as if the member states were one country. It has its own currency, the euro, which is used by 19 of the member countries, its own parliament and it now sets rules in a wide range of areas - including on the environment, transport, consumer rights and even things such as mobile phone charges.

What is the single market?

The single market is seen by its advocates as the EU's biggest achievement and one of the main reasons it was set up in the first place. Britain was a member of a free trade area in Europe before it joined what was then known as the common market. In a free trade area countries can trade with each other without paying tariffs - but it is not a single market because the member states do not have to merge their economies together.
The European Union single market, which was completed in 1992, allows the free movement of goods, services, money and people within the European Union, as if it was a single country. It is possible to set up a business or take a job anywhere within it. The idea was to boost trade, create jobs and lower prices. But it requires common law-making to ensure products are made to the same technical standards and imposes other rules to ensure a "level playing field".
Critics say it generates too many petty regulations and robs members of control over their own affairs. Mass migration from poorer to richer countries has also raised questions about the free movement rule. Theresa May has ruled out the UK staying in the single market. Labour leader Jeremy Corbyn has said continued membership of the single has to be an option in negotiations with Brussels.

TRADE SITUATION

Official trade statistics show that the European Union is the destination for about half of all British goods exports. The trading links are bigger if we include the countries that the United Kingdom trades freely with because they have a free trade agreement with the European Union. These agreements mean that 63% of Britain’s goods exports are linked to European Union membership.
It is highly probable that a favourable trade agreement would be reached after Brexit as there are advantages for both sides in continuing a close commercial arrangement. But the worst-case scenario, in which Britain faces tariffs under ‘most-favoured nation’ rules, is certainly no disaster. Exporters would face some additional costs, such as complying with the European Union’s rules of origin, if they were outside the single market. However, these factors would be an inconvenience rather than a major barrier to trade. In addition, fears that exporters would be left high and dry the day after the Brexit vote are unfounded. Under the Lisbon Treaty, a country leaving the European Union has 2 years in which to negotiate a withdrawal agreement.
In addition, falling tariffs, the decline in manufacturing and Europe’s diminishing importance in the global economy mean we doubt that even the absence of a trade deal with the European Union would hurt the United Kingdom’s overall exports materially. The benefits of being in the European Union are smaller than they were a few decades ago, when a Brexit would have been a far bigger deal. However, the effects will vary across sectors. Brexit would give Britain a crucial opportunity by allowing it to broker its own trade deals with non-European Union countries; indeed Britain could even have a unilateral free trade policy. Non-European Union countries may find negotiating with Britain easier and quicker than dealing with the European Union’s bureaucratic machine, as Switzerland has shown.
The production sectors in the economy face a more uncertain outcome than services. The range of potential outcomes is more variable as production sectors are more dependent on whether or not the United Kingdom agrees a trading agreement with the European Union and the nature of any such agreement. The possibility of tariffs on goods exports to the European Union gives greater downside potential, while the opportunity to open up trade with other countries or to increase the sector’s competitiveness through greater competition or cheaper inputs gives it more upside potential.
Contrary to the claims of many authors and commentators, it is probable that the impacts of Brexit on trade would be relatively small. Moreover, it is certainly possible that leaving the European Union would leave the external sector better off in the long run, if Britain could use its new found freedom to negotiate its own trading arrangements to good effect.

Financial Services

Financial services have more to lose immediately after a European Union exit than most other sectors of the economy. Even in the best case, in which passporting rights were preserved, the United Kingdom would still lose influence over the single market’s rules. The City would probably be hurt in the short term, but it would not spell disaster. The City’s competitive advantage is founded on more than just unfettered access to the single market. A European Union exit would enable the United Kingdom to broker trade deals with emerging markets that could pay dividends for the financial services sector in the long run

Regulation and Innovation

Brexit is only likely to have a limited impact on Britain’s productivity. The major potential for improvement comes from increased business investment which shows little connection with political developments. Estimates that axing European Union regulations would save Britain a lot of money exaggerate the true picture as the United Kingdom would still choose to implement many of them. It would also need to implement the union’s regulations to continue to export easily to the single market. Reduced regulation might give a small boost to productivity but wouldn’t be a game-changer.

Consumption and property market

It seems clear that the City is the part of the British property market that has most to lose if the United Kingdom opts to leave the European Union. It is certainly possible to tell a story in which the damage done could be considerable, but the role of the financial services sector in holding up the property market is probably overstated, leading us to believe that any negative impacts will be small, certainly at a macroeconomic level.
We anticipate that the impacts on the property market overall and on aggregate consumption in the economy will be limited. In the case of the latter, they may well be positive due to beneficial effects from independent policymaking on immigration, trade and regulation, as well as savings to the exchequer.

How Will Brexit affect Trade in Britain?

Source: Woodford Funds
Some studies show negative impacts of varying degrees. The Centre for Economic Performance at the London School of Economics estimates that the United Kingdom leaving the European Union and joining the European Free Trade Association will reduce British gross domestic product (GDP) by at least 2.2% in its optimistic scenario, and between 6.3% and 9.5% in its pessimistic one.

 The Confederation of British Industry estimates that the net benefit to the United Kingdom stemming from European Union membership is somewhere in the region of 4 to 5% of Britain’s GDP, or between £62bn and £78bn per year.

The National Institute of Economic and Social Research estimated that withdrawal from the European Union would permanently lower the British economy’s level of output by 2.25 per cent below what it would otherwise have been.

Other studies paint a more mixed picture. Open Europe estimates that, if the United Kingdom embraced protectionism in the wake of a Brexit, this could cost 2.2% of GDP by 2030. By contrast, if it followed a path of economic openness, Britain could outperform the European Union. In that case, Brexit could add at least 1.6% to national income by 2030.
4
There are also some positive assessments of Brexit’s economic impact. In 2000, the Institute of Directors estimated the cost of British membership of the European Union to be 1.75% of GDP. Leaving would eliminate this cost.
5
 Patrick Minford and Vidya Mahambare identified the ongoing costs of British membership and additional substantial potential future costs of harmonisation, pension sharing and euro membership, estimating these as equivalent to between 3.2% and 3.7% of GDP. Finding no appreciable countervailing benefits from membership, they offered this as the potential scale of benefit from Brexit.
6
 Civitas estimated the current recurring annual direct net cost to the United Kingdom of European Union membership as between approximately 3 and 5% of GDP, with a ‘most likely’ figure of 4%.
7
 Tim Congdon, on behalf of the United Kingdom Independence Party, has estimated that Britain’s membership of the European Union costs it an amount equivalent to 10% of its GDP. This is primarily driven by costs of regulation – 5.0% of national income – and the costs of resource misallocation – 3.25%.
8
The terms of departure and whether or not the United Kingdom negotiates an agreement with the European Union governing the future relationship will determine the magnitude and direction of the impacts of Brexit. Currently the United Kingdom is part of the single market, with free movement of goods, services, people and capital within the European Union’s border. It is likely that Brexit would change this.
Britain’s trade links with the European Union
The United Kingdom’s trade links with the European Union are considerable. Official trade statistics show that the European Union is the destination of about half of all British goods exports.
 The share is a little lower if services exports are included too but is still a sizeable 45%. Given that total exports account for 30.5% of British output, this means that the value of all goods and services exports to the European Union are equal to 14% of the overall United Kingdom economy.
The trading links are bigger if we include the more than 60 countries that the United Kingdom trades freely with because they have a free trade agreement with the European Union. These include Switzerland, South Africa and Turkey. Taking into account Britain’s exports to these countries means that 63% of its goods exports are linked to European Union membership. The manufacturing sector of the economy is heavily reliant on exporting, but growth in the services share of the economy has left manufacturing accounting for an ever smaller share of the United Kingdom’s output.

Strong chance of a trade agreement

The chances are high that a favourable trade agreement could be reached after Brexit, as there are advantages for both sides in continuing a close commercial arrangement. Not only is the European Union important to the United Kingdom’s trade position, British markets are important to the rest of the European Union. Admittedly, if we take the European Union as a whole, the 18% of its exports that go to the United Kingdom is small compared to the 50% of Britain’s exports that go to the rest of the European Union. However, the picture is different if we look at the largest individual economies within the European Union and Ireland (given its particular relevance for Britain). With the exception of Germany, Britain is a more important market for the biggest European Union economies than they are for the United Kingdom.

UK striking trade deals with other big economies

This is eminently possible, but is likely to take time. Having ceded responsibility for trade policy to the EU, the UK civil service may lack the capacity to strike major trade deals quickly.
It is also possible, as David Cameron argues, that other countries will want to see what terms the UK receives in Europe before committing to their own deal, potentially leading to further delays.
A larger question will be about the UK’s bargaining power with countries whose domestic politics push them towards protectionism, not free trade. Professor Chalmers warns that striking trade deals with major economies such as the US, China and India would be “tough” for Britain.
Brexit campaigners note that the EU has so far failed to secure such free trade deals, and suggest the UK would have a better chance negotiating in its own right with politicians in Washington, Beijing and New Delhi.

CONCLUSION 

Brexit is a very hotly debated topic presently and is being deeply studied by economists’ world over. Personally, I feel Brexit will greatly affect trade and manufacturing activities in UK. Currently, UK companies are able to trade with the EU on a tariff free and quota free basis. During negotiations for a new trade deal, there is nothing to stop Brussels seeking to impose a 5% tariff on all UK car exports .The UK can, of course, threaten tit-for-tat tariffs on BMW or Fiat cars, but it means consumers on both sides of the Channel suffer. There is also the risk that the EU will impose quotas, which limit the amount of goods and services that can be sold into Europe. As nearly half of UK’s exports happened within the European Union, exiting it will obviously lead to decline in exports.
This Project greatly helped me in Understanding Brexit. Its Merits ,Demerits and its effect on Trade between UK and other countries.

BIBLIOGRAPHY

• https://www.theguardian.com
• http://www.telegraph.co.uk
• https://woodfordfunds.com/economic-impact-brexit-report/

Cryptocurrency and the Future

This is a write-up I wrote for a school project earlier this year. It tries to predict the future of Bitcoins and other crypto-currencies.

Bitcoin and The future of Crypto-currency

INTRODUCTION

Digital transformation is generating a fierce debate among policy-makers, economists and industry leaders about its societal impact. As digitalization disrupts society ever more profoundly, concern is growing about how it is affecting issues such as jobs, wages, inequality, health, resource efficiency and security.

The economics of digitization is the field of economics that studies how digitization affects markets and how digital data can be used to study economics. Digitization is the process by which technology lowers the costs of storing, sharing, and analyzing data. This process has changed how consumers behave, how industrial activity is organized, and how governments operate. 

Recent times have shown the evolution of number of cryptocurrencies which are being used largely for transactions as well as investment purposes. The rise of cryptocurrencies is changing the world economic scenario at a rapid pace.

Crypto-currency is a medium of exchange, created and stored electronically in the block chain, using encryption techniques to control the creation of monetary units and to verify the transfer of funds. 

In today’s changing economic scenario of digital transactions, looks like cryptocurrencies are here to stay.

TOWARDS DIGITAL ECONOMY

Digital transactions can be broadly defined as online or automated transactions that take place between people and organizations—without the use of paper. Going digital provides great benefits for companies. Digital transactions save time and money, resulting in a better bottom line. Customer experiences are also enhanced.

With the internet becoming easily available, cashless transactions and mobile transactions have become widespread. In recent years, non-bank competitors have emerged and cut into the market share traditionally maintained exclusively by banks. These non-bank competitors are subject to fewer regulatory constraints, and their entry into the market has made the transition to digital transactions a crucial strategy for banks that want to stay competitive.

Beyond that motivation, though, banks can realize new opportunities and benefits through moving to digital transactions. For instance, banks can use digital payments as a path to reach new customers—ones they didn’t have access to in their traditional operations. Banks can also increase their fee and interest income by going digital and can extend their value proposition to existing customers. By streamlining approval and agreement processes, and by providing customers with a modern digital interactive experience, banks can help ensure customer loyalty and keep customers coming back for more. 

 The digital economy brings with it a number of opportunities, but also new challenges and rules of the game in the global market. Positioning of the country on the global stage largely depends on its ability to adapt to new conditions. Digital economy brings a new set of benefits, which can make it possible to reduce the differences that exist between rich and poor nations. Developing countries have the opportunity to transform its economy and to contribute to the development of the digital economy. Although these economies are characterized by high added value, faced with numerous obstacles, many developing countries cannot adequately respond to the demands of the digital economy. Inadequate access to the latest technology, sophisticated telecommunications infrastructure, low computer literacy as well as numerous cultural and socio-economic factors are just some of the challenges that developing countries have to face.

CRYPTOCURRENCIES

 Cryptocurrency is a controversial digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. Cryptocurrencies are a type of digital currencies, alternative currencies and virtual currencies. Cryptocurrencies use decentralized control as opposed to centralized electronic money and central banking systems. The decentralized control of each cryptocurrency works through a blockchain, which is a public transaction database, functioning as a distributed ledger. Bitcoin, created in 2009, was the first decentralized cryptocurrency. Since then, numerous other cryptocurrencies have been created. These are frequently called altcoins, as a blend of alternative coin. 

Decentralized cryptocurrency is produced by the entire cryptocurrency system collectively, at a rate which is defined when the system is created and which is publicly known. In centralized banking and economic systems such as the Federal Reserve System, corporate boards or governments control the supply of currency by printing units of fiat money or demanding additions to digital banking ledgers. In case of decentralized cryptocurrency, companies or governments cannot produce new units, and have not so far provided backing for other firms, banks or corporate entities which hold asset value measured in it. The underlying technical system upon which decentralized cryptocurrencies are based was created by the group or individual known as Satoshi Nakamoto. 

As of September 2017, over a thousand cryptocurrency specifications existed; most were similar to and derived from the first fully implemented decentralized cryptocurrency, bitcoin. Within cryptocurrency systems, the safety, integrity and balance of ledgers is maintained by a community of mutually distrustful parties referred to as miners: who are members of the general public using their computers to help validate and timestamp transactions, adding them to the ledger in accordance with a particular timestamping scheme. Miners have a financial incentive to maintain the security of a cryptocurrency ledger. 

Most cryptocurrencies are designed to gradually decrease production of currency, placing an ultimate cap on the total amount of currency that will ever be in circulation, as mimicking precious metals. Compared with ordinary currencies held by financial institutions or kept as cash on hand, cryptocurrencies can be more difficult for seizure by law enforcement. This difficulty is derived from leveraging cryptographic technologies.

The success of cryptocurrencies is due to it’s monetary properties.

Monetary properties:

1.) Controlled supply: Most cryptocurrencies limit the supply of the tokens. In Bitcoin, the supply decreases in time and will reach its final number somewhere in around 2140. All cryptocurrencies control the supply of the token by a schedule written in the code. This means the monetary supply of a cryptocurrency in every given moment in the future can roughly be calculated today. There is no surprise.

2.) No debt but bearer: The Fiat-money on your bank account is created by debt, and the numbers, you see on your ledger represent nothing but debts. It‘s a system of IOU. Cryptocurrencies don‘t represent debts. They just represent themselves. They are money as hard as coins of gold.

To understand the revolutionary impact of cryptocurrencies you need to consider both properties. Bitcoin as a permissionless, irreversible and pseudonymous means of payment is an attack on the control of banks and governments over the monetary transactions of their citizens. You can‘t hinder someone to use Bitcoin, you can‘t prohibit someone to accept a payment, you can‘t undo a transaction.

As money with a limited, controlled supply that is not changeable by a government, a bank or any other central institution, cryptocurrencies attack the scope of the monetary policy. They take away the control central banks take on inflation or deflation by manipulating the monetary supply.

CASE STUDY: BITCOINS FOR THE FUTURE OR NOT?

Bitcoin is a crypto-currency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a block chain. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009. 

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. Research produced by the University of Cambridge estimates that in 2017, there were 2.9 to 5.8 million unique users using a crypto-currency wallet, most of them using bitcoin. 

Bitcoin has been around since late 2008 but it only started making the news in early 2013. It is a crypto currency and a payment system; its main advantage being that transactions are anonymous and peer-to-peer (i.e. made directly without an intermediary). Bitcoin’s unique architecture is set-up in such a way that their creation (or “mining”) gets progressively more resource-intensive and total production will be limited to 21 million Bitcoins.

It’s certainly an interesting concept with many advantages but also some important disadvantages. For example:

1. Given its pseudonymous nature and that Bitcoin address owners are not explicitly identified, such transactions are effectively anonymous. However, this anonymity has been known to attract transactions from illegal activities, the best-known example being that of the Silk Road website. This has been a problem with regulators and officials, as they recognise it as a medium for illegal transactions.

2. Bitcoin has been recognised as currency in many countries and as of today it’s the most liquid & widely accepted crypto currency in the world. However, there is a long list of alternate crypto currencies that are eager to grab market share and challenge Bitcoin’s dominance. It’s possible that once that ceiling becomes severely limiting, users will turn to other crypto currencies, effectively increasing the global supply.

3. Bitcoin trades continuously on exchanges around the world in a very quick and straightforward manner, and it is conveniently stored electronically in “wallets”. However, having online wallet providers introduces an extra risk factor that cannot be ignored. 

In a research survey I conducted among lower investors I found many investors to find Bitcoins and crypto-currencies in general very risky. But, this is not the same with all investors. Many of the world’s largest investors have mixed reactions on the future of Bitcoin. Many of them, have played a role in the promotion of Bitcoins, with even some of the world’s richest people speaking in favour of it. 

Many investors find it risky, because of it’s highly fluctuating prices, and it’s volatile nature. Bitcoin price has been very volatile since early 2013 when it was trading between $10 and $15, and soon afterwards it went on a parabolic rise to hit a high of $1163 within the same year. It spent the next 18 months dropping all the way back down to the $200s but then went on the ascent again as global uncertainty persisted.

It made the news once again in late 2016 when there was a China-led buying spree, mainly from people trying to escape the Yuan’s devaluation. Its simplicity, anonymity and transaction ease made it a very popular choice among the Chinese. In early 2017 it almost hit an all-time high, peaking at $1140 and at that point the Chinese central bank made an important announcement. The CB said that it wanted to investigate Bitcoin transactions in market manipulation, money laundering and unauthorised financing. At time of writing BTC is trading at $828, which represents a staggering 2-week drop of over 37%.

For instance, take a look at the fluctuactions in the prices of Bitcoin on April 9th given below. In a single day the rises and falls in the price are very high. Such risks, are the reason why many investors have high uncertainity in the future of Bitcoin.

 Many have viewed the rise of bitcoin and other cryptocurrencies as a massive bubble similar to the dotcom and other bubbles in history which saw asset prices increase without any fundamental reason. Goldman Sachs, for instance, warned investors in February that most cryptocurrency prices are headed to zero as they lack intrinsic value. So, to sceptics, the crash now will likely vindicate a belief that markets eventually mark down the prices of assets that have no real value, to zero. Cryptocurrency enthusiasts, on the other hand, view the crash as just another healthy correction that is part of any asset’s rise over the long run. In fact, they point to similar steep crashes in the price of cryptocurrencies in the past that turned out to be short-lived. Thus they see the present crash as a good chance to buy cryptocurrencies cheaply before their prices begin to rise again.

Technically, cryptocurrencies are still trapped in a downtrend which began in mid-December amid increasing fears of a regulatory crackdown by governments. Though unlikely, this downtrend may come to an end if investor sentiments suddenly change in favor of cryptocurrencies once again.

Many believe that the biggest hurdle facing cryptocurrencies is their poor fundamentals. None of the cryptocurrencies, for instance, has yet proved its fundamental value as a currency that will be readily accepted by a huge population as a medium of exchange. This is in contrast to national currencies such as the U.S. dollar which are widely accepted by people as money. So cryptocurrencies, in essence, continue to be viewed as a gamble by most. Governments across the world have also not been too keen on allowing cryptocurrencies to be used as alternative money as they view private currencies as a threat to their sovereignty. The Reserve Bank of India, for instance, imposed a ban last week preventing banks from dealing with cryptocurrencies. The present crash has only managed to bring these risks to the fore.

How do Economists review The Future of Bitcoin?

Forbes

“Bitcoin will likely go down in history as a great technological invention that popularized blockchain yet failed due to its design limitations. Just like the industrial revolution was fueled by the combustion engine, Nakamoto’s most valuable contribution is the blockchain polymorphic engine that will further accelerate innovation in the post-information age and immensely affect our lives.”

Chris Robert, currently an Adjunct Lecturer in Public Policy at Harvard

“Compared with corporate securities, futures, or even derivatives, Bitcoin is even less inhibited by any underlying sense of value. The bubble can just grow and grow, so long as demand increases faster than supply — and so long as the network doesn’t crash, a new cryptographic exploit doesn’t unravel everything, the fundamental lack of anonymity doesn’t bother anyone, those who lose private keys and thus potentially small fortunes don’t complain too loudly, improvements (or hacks) to “mining” don’t lead to sudden shocks to supply, etc. Profiting from a bubble of any sort can be a risky business, but our global economy is not at all lacking in people willing to give it a go. Thus, as a potentially exciting new vehicle for financial speculation, Bitcoin may be with us for some time”

Bill Gates, Founder Microsoft Corporation

"Right now cryptocurrencies are used for buying Fentanyl and other drugs so it is a rare technology that has caused deaths in a fairly direct way. I think the speculative wave around ICOs and cryptocurrencies is super risky for those who go long.”

Does cryptocurrency have an impact on trade?

Crypto-currencies are now predicted to disrupt the way people do business, and those buying and selling across borders stand to benefit. 

Advantages of Crypto-currency for Trade	Disadvantages of Crypto-currency for Trade
• A lack of exchange rate. Everyone is using dealing in the same currency with the same value, without the constant hassle of monetary exchange.	• The future of crypto-currencies remains uncertain.
• Fast money movement. Crypto-currency transactions are near instantaneous.	• Bitoin isn’t legal in all countries, and therefore can’t be used everywhere.
• Lower taxes and fees.
• Detailed records

While many are debating the future of Bit-coin as a tech bubble versus a viable long-term currency, it’s likely at least some of the technology created by Bit-coin is here to stay. From quick transfers to the thorough records created by block-chains, businesses and institutions are looking at how they can use crypto-currency and related technologies to make doing business easier and cheaper. Regardless of how the future pans out for crypto-currencies, it’s clear that savvy business owners should be exploring crypto-currency and block-chain technologies to see how they could benefit and make a move to capitalize on the technology.

Does Crypto-currency have an impact on Employment?

With billions of dollars expected to be saved every year by moving transactions to block-chains or distributed ledger systems, what's often lost in the conversation is that much of this money will likely stem from a reduction in salaries currently paid to real, working people. Addressing the matter was Blythe Masters, CEO of one of the industry's best-funded startups, New York-based Digital Asset Holdings.

While industry numbers are only now beginning to be researched, Masters positioned block-chain in the same category as robotics, machine learning and artificial intelligence - all industries that she believes need to consider the impact of their innovations on public policy surrounding job creation.

According to Masters' own estimation, blockchain's impact will go far beyond the 5-10% of employees that she says "any well-disciplined organization will naturally try to squeeze out" in the process of improving processes.Instead, she estimates that 30-60% of jobs could be rendered redundant by the simple fact that people are able to share data securely with a common record.

Growth has created a surge in demand for employment in crypto-currencies: A report saw a 100% increase in advertised jobs in the past six months. This surge in recruitment was not just in Tech roles, but in all functions across the board; with such an influx of capital, crypto-currency businesses are boldly investing into expanding their headcount. Factors that attract candidates include higher median salaries, more flexible contracts, and better benefits. Growth in the crypto market also ties into the expanding FinTech sector, report from earlier this year.While bitcoin value fluctuations may be testing investor confidence, the hiring market for blockchain-based technology remains overtly bullish

Survey

Do people think crypto-currencies have a future?

During the course of the survey, I found many people to be optimistic about the future of Bitcoin. Although, many people had opposed views to the former. These people believe prices of Bitcoin will keep going down as it has been for the past few months and will eventually crash.

Some of the candidates surveyed answered that they were uncertain about the future of bitcoin, while many others suggested Bitcoin may survive but it will never rise to former levels. Very few of the respondents surveyed responded that the future of Bit-coin will be limited to certain countries alone, as many countries find cryptocurrencies a threat to their own national currencies. Such countries will limit trading of Bitcoins through governmental policies.

LEARNERS’S OUTCOME

This project analyses the future of Cryptocurrencies .It provided me with deep knowledge in the field of cryptocurrencies. 

After doing this project, I would conclude that cryptocurrencies are highly controversial and very versatile. Investing in Bitcoin is very risky both for the investors as well as governments. Today, cryptocurrencies have come under the radar for the wrong reasons. Cryptocurrencies  are said to be funding illegal activities like terrorism and drug smuggling, due to the anonymity of it’s users and administration. Though most popular cryptocurrencies, like bitcoin, are anonymous and only use a key to identify a user, it is possible to include personal information, like the ID number, and make the cryptocurrency non-anonymous. The use of cryptocurrency also allows for instantaneous transactions and borderless transfer-of-ownership (“money with wings”), which reduces transaction time and cost, since financial intermediaries are not needed.

There have been many individuals who want to invest in Bitcoin but who are put off by the complexity involved, and also by the security risk. You need to get a digital wallet, preferably a physical piece of hardware. Then you need to get very good anti-virus protection and make sure you have backups. Do all that and you could still potentially be vulnerable to hacking. Cases where cryptos are hacked or stolen are multiplying and this is surely putting people off. Bitcoin futures will provide a platform where getting long Bitcoin becomes extremely simple, and for this reason I believe that the initial reaction to the introduction of this future will probably be bullish. It’s my opinion that Bitcoin will continue to rise going into year end.However, there will have to be a point where there will be a major correction. Bitcoin price will no longer be subjective and driven purely from capital flow, but it will also have to somehow represent intrinsic value. This is something that Bitcoin longs need to be very careful of, and plan their contingency strategy accordingly.

BIBLIOGRAPHY

1. https://www.forexanalytix.com

2. http://www.digitaltransactions.net

3. https://blockgeeks.com

4. https://www.forbes.com

5. http://www.thehindu.com

6. http://www.tradeready.ca

7. https://www.coindesk.com