Can Cryptocurrency Help in Combating Worldwide Inflation?

cryptocurrency and inflation

Combating Worldwide Inflation: Whether you invest in the market or not, inflation affects everyone of us. With inflation in fiat currencies, we experience a surge in the prices of daily commodities.

And although inflation is a common economical event, in some situations, it might get out of control. For example, the recent surge in US dollars has caused inflation on other fiat currencies worldwide. Moreover, political events, the recent pandemic have contributed to the inflation rate.

Now, there are different strategies to fight inflation. However, not all of them are inflation-proof. This is where several investors think that cryptocurrency can be a better solution to tackle inflation all around the world.

Can Bitcoin Really Help Combat Inflation in Developing Countries?

Does Cryptocurrency Have The Potential to Be a Haven?

Investors think so! And we do have some current examples where cryptocurrency such as Bitcoin proved to be a haven.

The recent example comes from Turkey where the country’s currency Lira saw a massive depreciation resulting in high inflation. Cryptocurrency like bitcoin was the only way to save the economy of the country.

Similarly, political unrest in countries like Zimbabwe and Venezuela also experienced inflation. In both countries, bitcoin investment controlled the inflation rate to a certain extent.

Although the interest of investors to invest in cryptocurrency differs, the result certainly contributes to the decrease in overall inflation in the economy.

Why Cryptocurrency Is Resistant to Inflation?

  • Decentralized Nature of Cryptocurrency

The decentralization of cryptocurrency benefits the economy by reducing the chances of inflation. Since there is no central authority to control cryptocurrency, it is not limited by the conventional economics of the country.

The availability of cryptocurrency is embedded in blockchain technology. This makes it transparent and easier to monitor and track in real-time.

  • Limited Supply

Usually, inflation occurs when there is a large number of currencies circulating in the market. This reduces the faith of individuals thus depreciating the value of the fiat currency causing inflation.

However, such is not the case with cryptocurrency. There is a limited supply of the cryptocurrency. In terms of bitcoin, the supply number falls at 21 million coins. This means no new coins will be generated thus increasing the price of bitcoin but controlling inflation rates.

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How Does Cryptocurrency Affect an Average Man?

Apart from the massive investment potential of cryptocurrency, it has real-time implications in the life of an average individual.

  • Aiding the Unbanked Population: Several individuals around the world don’t have access to regular financial services. In this case, cryptocurrency can become a way to provide financial inclusion to such a population. The decentralized nature of cryptocurrency makes it easier for individuals to gain access to funds.
  • Remittance Mode: Several people transfer money from one country to another using wire transfers. This incurs heavy remittance costs. With cryptocurrency, these remittance costs can be reduced making it easier for people to transfer money across borders.
  • Financial Aid: Several people are unable to get financial help such as a bank loan due to lower credit scores or lack of KYC. In cases like these, people can get financial aid using cryptocurrency.

Bottom Line

Cryptocurrency is not only an investment asset, but it can also contribute to solving real-world problems faced by an average person. Digital currency like bitcoin has the potential to control inflation rates which seem to be at an all-time high at the moment.

Check out Coin Informer for more insights into the cryptocurrency world!