One of the topics of the second episode of our podcast, Satoshi's voices It was inflation and the solutions (or lack thereof) that the Central Banks have put on the table.
Bitcoin as a hedge against inflation
Bitcoin is typically perceived as a inflation protection, since the value of fiat money decreases as Central Banks print more money.
For its part, Bitcoin has a fixed supply of 21 million units, so it will always be a deflationary currency.
Furthermore, while Central Banks can change their mind at any time and start printing more money, to change the supply of Bitcoin It would be necessary to agree with the entire community, something very complicated.
A different inflation
Historically, the problem of inflation has been something “transitory”, as our guests Juan Torres and Pablo Gil pointed out in the podcast.
However, the current inflation crisis, caused by monetary stimuli derived from the COVID-19 pandemic, is different.
First of all, their Causes go beyond printing money during the pandemic, since we must also add the war in Ukraine, speculation in the food markets, the energy crisis or the national debt crisis.
All this has caused a inflation higher than usual, which has reached double digits in most of the world and which, in some countries, such as Zimbabwe, Lebanon, Venezuela or Syria, has exceeded 3 figures.
In this sense, the solution of the Central Banks, in most cases, has been to raise interest rates, which for some experts It's not the best optionBecause could cause an economic recession that forces a new printing of currency.
Is adoption growing in countries with higher inflation?
Countries with less financial stability have traditionally been the spearhead of crypto adoption.
El Salvador was the first country to recognize Bitcoin as legal tender and, several months later, Central African Republic followed in his footsteps.
In this sense, according to a study carried out by Chainalysis, the countries with the greatest financial instability continue to be the ones that lead the adoption of cryptocurrencies.
The study goes beyond purchases or swaps. Instead of focusing on daily transaction volume, the intelligence company uses other metrics such as amount of savings in cryptocurrencies.
The objective is to find those countries that They use cryptocurrencies to “escape” inflation and they have a greater real adoption.
In the first 2 positions we find emerging countries Vietnam and the Philippines, while third place goes to Ukraine, which has found in cryptocurrencies a way to alleviate the financial problems caused by the war.
Other countries such as India, Pakistan, Nigeria, Morocco, Nepal, Kenya, Indonesia and Argentina, which occupies 13th place, also stand out among the top positions.
Chainalysis concludes that people in countries with inflation problems or affected by high financial instability often turn to cryptocurrencies, especially Bitcoin and stablecoins, as a way to protect your income.
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