Hyperinflation is a devastating financial event. Can blockchain and cryptocurrencies survive and provide stability to countries in the future? Twitter CEO, Jack Dorsey believes so.
Jack Dorsey, the CEO of Twitter, has warned about hyperinflation and how it will affect the world. He also mentions how cryptocurrency could be a solution to this problem.
Jack Dorsey has expressed his worries about hyperinflation, claiming that it is already occurring. Despite the fact that cryptography is a very new technology, some people are touting it, notably Bitcoin, as a solution to a range of economic problems, including hyperinflation.
Everything will alter as a result of hyperinflation. It’s occurring right now.
October 23, 2021 — jack (@jack)
Is there any truth to these assertions, though? It’s tough to measure the efficiency of crypto as a safe haven asset with just 13 years of experience to go on.
However, case studies of nations that have recently experienced hyperinflation provide a compelling tale about the function of crypto in such situations.
Venezuela was once a major economic force.
Venezuela is the finest example, since it is akin to many Western countries in that it was once a stable democracy and an economic powerhouse, owing to its massive oil reserves.
However, in 2013, a reduction in the world oil price prompted then-newly elected President Nicolas Maduro to create bolivars in order to avoid a short-term currency crisis. This was devastating since it pushed down the value of the currency, causing additional price increases and therefore fuelling the hyperinflationary cycle.
Inflation almost doubled from the previous year in 2013, reaching a high of 65,400 percent five years after President Maduro announced the decision to print additional bolivars.
Statista.com is the source for this information.
As a consequence, there is a humanitarian catastrophe in which monthly earnings are insufficient to purchase basic necessities, recurrent countrywide outages, food shortages, and disease as a result of medical resource constraints.
As an illustration of what may happen, consider cryptocurrency in Venezuela.
Venezuelans have been fast to adapt alternatives to currency in response to the current crisis. Venezuela has surpassed Colombia as the biggest Latin American nation for digital payments, according to Treinta, a Colombian fintech firm.
“In Venezuela, 28.6 percent of transactions were completed digitally, compared to 5.93 percent in the rest of the area.”
This makes sense since carrying big amounts of cash is inconvenient and difficult due to withdrawal limitations at banks and ATMs.
Furthermore, the usage of US dollars has grown significantly, with the Venezuelan think tank Ecoanalitica stating that US dollars now account for two-thirds of all financial transactions.
As residents become more digital and turn to non-bolivar payment options, the move to cryptocurrency seems to be a logical progression.
The amount of Bitcoin/bolivar trade has increased dramatically since 2020, according to data obtained by coin.dance from localbitcoins.com.
coin.dance is the source of this information.
Cryptocurrencies are frequently accepted in return for payment for ordinary products such as furniture, clothes, and food at brick-and-mortar establishments. Venezuelans employ a variety of crypto tokens, including Ether, Dash, and EOS, in addition to Bitcoin.
Using Venezuela as an example, if hyperinflation occurs in the United States or other Western countries, crypto may become more widely embraced.
However, adopting cryptocurrency will not alleviate the issue of hyperinflation. It just acts as an alternate means of transacting – which is excellent for those who already have, but makes little difference to the rest of the world.
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Hyperinflation is a problem that has been present for a while. The “hyperinflation what to do” is an article that discusses the issue and offers solutions.
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