Friday, June 9, 2023

Is Crypto the Answer to Rising Inflation?


Because of worldwide lockdown measures, the pandemic breakout in 2020 had an impact on consumer buying habits.

Economists were concerned about the accuracy of the inflation measures in capturing price increases as a result of this. Inflation is a persistent threat to fiat currencies’ value. As a result, people seek to invest in Gold or other assets that can maintain their value over time to secure their holdings.

A Deflationary Hedging Strategy

In February, Russia’s consumer price inflation hit a six-year high. This is primarily due to rising food costs. The yearly rate was 9.15 percent, according to data supplied by the Rosstat agency.

Bitcoin, the most valuable cryptocurrency in terms of market capitalization, is a deflationary asset. As a result, citizens all around the world are increasingly relying on it to guard against growing prices and hyperinflation. Interest rates and money printing can’t change as quickly with crypto as they can with fiat.

Furthermore, the supply of Bitcoin will never surpass 21 million. It served as a reliable and inflation-proof store of value. Despite Bitcoin’s rise over the past year, the crypto market’s volatility remains a point of contention.

Value Store that Can Transfer

Bitcoin and other cryptocurrencies are long-lasting, easily replaceable, secure, and difficult to come by. It’s also more portable, transportable, and decentralized in some aspects. As a result, anyone, anywhere in the world, may now store and secure Bitcoin.

The blockchain technology that underpins Bitcoin has real-world uses. In wealthy countries with generally stable fiat currencies, Bitcoin has limited practical applications. In countries prone to hyperinflation and political turmoil, however, Bitcoin is a preferable medium of currency.

People in hyperinflationary economies are also becoming more interested in stablecoins. As more merchants and stores accept cryptocurrencies as payment, stablecoins are a great choice. In volatile markets, BUSD and other fiat-backed stablecoins are gaining popularity.

Better trading Method

Inflation can lose by using forex trading and various fiat currencies. Unlike traditional currency exchanges, stablecoins can be purchased 1:1 with USD via wire transfer. BUSD, USDT, USDC, and TUSD are some of the other stablecoins that can be converted and received for free.

Crypto and War

It isn’t the first time that people have resorted to cryptocurrency to help a country in need. However, it appears that this is the first time that crypto has become the main topic of debate when a global conflict erupts.

Nadya Tolokonnikova, the co-founder of the punk band Pussy Riot, has established a crowdfunding campaign to aid the people of Ukraine. Vitalik Buterin, the ethereum founder who was born in Russia, has urged people to donate cryptocurrency to humanitarian operations in the nation.

Although digital currencies have the potential to assist people fleeing war zones, it is unclear how they will influence international conflicts. Cryptocurrencies are becoming a part of global economies, regardless of their social consequences. They assist people in finding employment outside of banks and financial institutions.

Volatility Issues

The surge in value of cryptocurrencies, according to critics, is the primary cause for the influx of institutional money into the market. Despite the decline in July, Bitcoin still managed to earn 2% this year.

Following Bitcoin’s precipitous 45 percent collapse in May, many investors moved their focus to Gold. Bitcoin has regards as a young industry. It has yet to establish itself as a reliable asset class or a safe shelter for money. Gold, on the other hand, has a long history of reliability and trustworthiness.

Ivan Cruz
Ivan Cruz
Ivan Cruz is a writer for Cryptoconstellation. He has his Masters in Applied Research in Economics & Business. Ivan has been trading crypto for the past 7 years himself and feels it is his duty to bring you all the latest news.

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