Being available 24/7, crypto is an added benefit for both investors and consumers, unlike the traditional market that follows fixed settlement cycles and trading hours.
The term inflation or hyperinflation has always been a debatable topic ever since the beginning of money. The world has previously encountered such situations, and we all are well aware of its disastrous consequences. And once again, investors and consumers seem conscious enough about the economic condition of the world post-pandemic.
Already, since the pandemic outbreak, industries have gone into shutdowns resulting in crisis throughout the world. The world economy has trembled, and many livelihoods have been compromised. To prevent this, governments and the central banks have increased the flow of cash throughout the market. As a result, many countries have already shown a huge depletion in the currency, causing the entire nation to suffer from inflation.
Perhaps, to escape the worst consequences of hyperinflation, investors are constantly looking for value-driven assets. And with the introduction of cryptocurrencies like bitcoin in 2009, it is like the world has found a viable alternative to government-printed money. With bitcoin setting up a fixed limit of only 21 million coins, it is believed to have the potential to resist further inflations. And similarly, all other cryptocurrencies are now expected to be an ideal option to save the world from upcoming hyperinflations.
What Is Hyperinflation?
The term hyperinflation indicates an excessive increase in the general prices of items. It gradually depletes the actual value of the currency to a great extent. Hyperinflation occurs when the prices of goods and services exceed by 50% or more over a period of a month. It is measured by an exponential increase in the daily prices of the item by around 5% – 10%.
Hyperinflation can lead to several deteriorating consequences. Consider Venezuela and Argentina, both countries having hyper-inflationary economies. In Venezuela, due to excessive money printing, the entire nation went into hyperinflation, leading to a jaw-dropping hype in the prices of food and other daily-life items in the year 2020. As of Argentina, the nation has a long history of failing to maintain stability in its economy. The country has been seen to encounter inflations and hyperinflations several times in the past.
How Can Cryptocurrencies Save You from Upcoming Hyperinflation
Since the value of money depletes excessively at the time of inflation, investors have been observed to show their interest in non-devaluation assets. In such a case, gold and oil are seen as the most value-driven assets for the time being. However, the last year, when the entire world went under lockdown, even the assets such as oil have experienced depreciation in their value. As a result of this, consumers have shown great interest in buying digital assets over traditional ones.
If we talk about cryptocurrency in simple words, they are digital assets involving the most efficient peer-to-peer banking system. Cryptocurrencies are now seen as a superior alternative that could come real handy to save you from the upcoming hyperinflation. Although digital currencies were previously thought to be more volatile, they have shown great consistency and market stability, unlike the stock market.
Moreover, from the incident in early May, when the government was deliberately increasing the circulation of printed money, Bitcoins halved their amount of supply in the market. This event caused investors to look away from traditional commodities and showed more attention to cryptocurrencies. Besides, it also displays the controlled supply of Bitcoins throughout the market, with its maximum limit set as 21 million tokens only.
Apart from these, crypto being an absolutely digital currency, minimizes its vulnerabilities. They lack any sort of government interferences and are solitary from the variable market. Plus, unlike gold and other commodities, cryptocurrencies are even used as an exchange medium in the digital world economy. This makes it further easier to deal with crypto instead of general goods or commodities. And crypto being available 24/7 is an added benefit for both investors and consumers, unlike the traditional market that follows fixed settlement cycles and trading hours.
The working of cryptocurrencies and the blockchain system is far more transparent than the traditional government-printed currencies. Its solitary nature and limited supply prevent it from frequent value depreciation. This way, the increasing demand and limited supply of crypto will push the value of the digitally oriented currencies in the market. Moreover, being a global currency can help stabilize the market and play a vital role in saving the world economy from the upcoming hyperinflation.