Amid financial instability, bitcoin (BTC) has become the way people are using to enter global commerce, as admitted by the International Monetary Fund (IMF) in its most recent report.
According to research titled “Introduction to Cross-Border Bitcoin Flows: Measurement and Drivers,” the IMF determined that transactions with the digital currency provide an avenue for people to stabilize their savings, helping them to transact cross-border “on terms that "They are not possible through their local currencies."
In this way, the advantages of BTC over fiat money are highlighted, as it is "the fundamental tool" that people are using to save and move capital, without control of the traditional banking system.
In that sense, they mention countries with strong economic crises and high inflation as those that register the highest level of cryptocurrency adoption. Hence they cite Argentina and Venezuela among those with the greatest capital flow with BTC, mainly in the period of time from 2019 to 2021.
According to the IMF, residents of countries with more restrictive financial regulations also stand out among those who use bitcoin the most to move capital across their borders, more freely.
The IMF adds that, in these regions, bitcoin has become a necessary financial tool to preserve wealth and access global markets, "rather than simply being a speculative investment." Such a fact has been possible due to the increase in the use of cryptocurrency that has been observed in the last decade throughout the world.
“The rapid growth of bitcoin since its launch in 2009 has increased its possible macroeconomic implications ,” recognizes the international organization. This, while qualifying the digital currency as the unit of account of a “large decentralized global digital ecosystem with public access.”
“We conjecture that cross-border bitcoin flows have not yet replaced existing capital flows at this time,” the analysts comment. They insist that “financial risks” associated with the use of BTC remain potential and must be addressed in new studies.
At this point, the IMF reiterated its ideas related to the alleged dangers of cryptocurrencies. For this reason, he once again warned about the "negative consequences" associated with the growing widespread use of bitcoin for cross-border flows.
He mentioned among them the lack of supervision and pseudo-anonymity that cryptocurrencies provide. Something that, in his opinion, can complicate regulators' efforts to monitor and control international financial transactions and prevent illicit activities such as money laundering.
As explained in the report, IMF analysts reviewed transaction data, both on-chain and off-chain. With this they managed to explore the trends behind the use of bitcoin in cross-border transactions.
This is how they determined that BTC operations are not only substantial in volume, but also have unique characteristics compared to traditional capital flows.
In this sense, they conclude that movements with traditional assets are more sensitive to economic indicators, such as the strength of the currency. Bitcoin, for its part, has a greater correlation with market volatility and user sentiment indices (fear or greed).
