Currently, bitcoin has reached a high point and continues its growth path. Due to this reason, many people have started thinking about Bitcoin mining. The power demands also increased significantly by 20% in recent times, attributed to Bitcoin’s mining process. Visit the Bitcoin Era for more information on bitcoin trading.
There is no specific information available to display the impact of Bitcoin on the Armenian share market. However, some commentators have stated that since there was a significant rise in bitcoin price, many people got attracted to buying Bitcoins, affecting the share markets.
There are five benefits of bitcoin on the share market. Some of the positive effects that were seen after the introduction of Bitcoin technology in the Armenian capital market are as follows:
- The primary benefit of using bitcoin in the capital market is that it creates an opportunity to transact business 24*7, which comes with many benefits. It reduces the stress associated with closing the company at any specific time, thus creating a flexible working environment. In addition, it also provides faster settlement time, low transaction fees, and less stringent regulations when compared to traditional capital markets.
- Increased liquidity also positively affects the Armenian share market attributed to bitcoin. High liquidity in the marketplace would provide different opportunities for people to invest their money into it. For example, with an increasing number of investors in this cryptocurrency, it has become easier for merchants to accept payment from different parts of the world, increasing the liquidity of their business.
- One more positive effect on the share market is entering and exiting much more accessible than traditional markets. New traders find it challenging to enter capital markets because they need large initial deposits. Bitcoin allows them to enter this market with just $20. These low entry barriers motivate many new users to enter this market, thus increasing the share market liquidity.
- Bitcoin has proved its use as an effective marketing tool for capital markets, allowing traders to conduct large transactions without any problems. It also provides a secure way of trading due to an open ledger where complete information is available to the public with full transparency. This helps merchants make quick decisions and understand the market before investing their money.
- Another benefit of bitcoin is reducing third-party service providers, allowing traders to make direct transactions. For example, there was a law ” On payment systems and the central bank,” in Armenia, which required third-party services to make transactions between two parties. Bitcoin technology helps traders avoid these third-party services, which allows them to save a lot of money in fees.
Apart from the five positive effects on the share market, there are three adverse effects of bitcoin technology that you can determine. Some of these were seen after its introduction, and some continue to affect the stock market:
- Many people adopted Bitcoin to earn quick money due to increasing price volatility in recent times. As a result, many people bought bitcoin without knowing its risk and sold it when the prices rose, which led to short-term instability in bitcoin prices. This volatility is one of the main reasons for a negative effect on the share market because investors are unable to predict how much money they would get after selling their shares.
- One more negative impact of the introduction of bitcoin in the capital market is that it has led to illegal activities. Since it is difficult to track this cryptocurrency, there are chances that people might use it for human trafficking, terrorism financing, money laundering, etc., which would threaten national security.
- One of the main drawbacks of using bitcoin is that its decentralized nature offers few benefits. Instead, it creates an environment where anyone can access your account, leaving you with no control over what is being done with your money.
In conclusion, there are both positive and negative effects on the capital market because of the introduction of bitcoin. Some sound effects include enhanced liquidity, faster settlement, low transaction fee, etc., whereas some adverse effects include volatility in price, illegal activities, etc.