What is black market, and benefits of black market.
The black market refers to illegal or unauthorized economic activities that occur outside of officially recognized channels.
These transactions, often referred to as "under the table" deals, are conducted to circumvent price regulations or taxes imposed by the government. The products and services sold in the black market may be illegal, or they may be legal but exchanged to avoid paying taxes.
The term "black market" also applies to the exchange of foreign currency at rates that differ from the official rate established by a government.
Historically, the black market has been driven by foreign exchange restrictions that prevent individuals from accessing official markets, forcing them to use unofficial channels.
The term "black market" is thought to have originated from the sale of slaves after abolition, the connection between the words "black" and "shadows" or "darkness," and anarchist organizations. In the past, the US dollar was a popular currency in the black market, but its appeal decreased when it lost its connection to gold in 1971 and as other currencies such as the West German Mark, Swiss Franc, and gold gained popularity.
In recent decades, black markets have largely disappeared due to the economic liberalization movement of the 1980s and 1990s, however, they continue to thrive in certain countries such as Venezuela, Iran, and Nigeria. Despite being illegal, many otherwise law-abiding individuals have engaged in black market transactions.
There are several benefits of using the black market exchange rate, such as lower stress, less work, and time, the absence of formal procedures, and the ability to generate income.
Additionally, black market rates often offer a more realistic picture of a nation's economic situation, compared to official exchange rates. Furthermore, these market rates are more prospective, news-sensitive, and indicative of how people perceive the prospects for their currencies, making them more informative than official rates.
