Bitcoin: A Solution To Economic Uncertainty?
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Though we have our problems, the United States is fortunate to have a solid and stable fiat currency. We see bitcoin as a hedge against inflation and an exciting investment opportunity. For some outside the US, bitcoin is so much more than an investment.
People in other countries don't have it so lucky. In some developing areas, people use bitcoin to protect themself from unjust monetary policies. Unfortunately, in some places where bitcoin could be most beneficial, governments are attempting to outlaw it altogether.
This week, I'm exploring how people in Turkey, India, Nigeria, and Venezuela are using bitcoin to combat economic insecurity, hyperinflation, and harsh governmental oversight.
Turkish People Turn to Bitcoin
People in Turkey are looking to Bitcoin this week as the country faces economic turbulence. Turkish President Recep Tayyip Erdoğan suddenly dismissed the nation's top central banker, Naci Agba, on Saturday, causing the value of the lira, the local currency, to plummet by as much as 14%. In light of the news, Bitcoin-related internet searches spiked by 566% as people attempted to cope with the sudden and shocking news.
According to BitNews Today, the minimum ask price for BTC reached $64,000 in Turkish lira. Some offline exchanges were charging up to $100,000 in lira for one bitcoin. Amid political unrest, demand for a safe store of value is so high in Turkey that crypto seekers are willing to pay nearly double the global ask price.
India Threatens to Ban Bitcoin
India is preparing to propose a ban on bitcoin and other cryptocurrencies, according to a senior Indian government official that spoke with Reuters earlier this month. The ban is expected to be quite harsh - criminalizing holding, trading, or mining any digital assets. It is speculated that this proposed ban is because India sees bitcoin as a threat to its own plans to release a central currency banked by the country's central bank. If the rumors are true and the crypto ban does happen, India will be the first government to criminalize all things crypto.
With around 190 million unbanked adults, India is second to China regarding the number of residents who don't participate in the formal financial sector. Bitcoin offers a promising solution that could help stimulate financial inclusion in the area. Threats to criminalize it all together are sure to do more harm than good.
Bitcoin is Booming in Nigeria
Nigeria, the home of Africa's largest economy, is experiencing a booming cryptocurrency market. This boom is presumably due to the local currency's incessant inflation on top of widespread unemployment and a ridiculously expensive traditional bank system. The Nigerian people use bitcoin as a safe store as well as a way to generate passive income.
In October 2020, Nigeria saw an influx of anti-police brutality protests called the End SARS movement. This movement was almost entirely almost by bitcoin because the banks shut down protestors' bank accounts. Not only is bitcoin allowing the Nigerian people to prosper economically, but it is also allowing them to organize in search of justice.
In February, the Central Bank of Nigeria announced it had placed a ban preventing the country's banks from servicing crypto exchanges. Banker's later clarified they will not outlaw bitcoin altogether but have said they do not see it as a legitimate currency. Since then, bitcoin has been trading at a premium. According to CoinTelegraph, while bitcoin was valued at $57,349 in the United States, it was being bought and sold at more than a 70% premium in Nigeria for a price of $97,509.
People in Venezuela Prefer USD
Bitcoin adoption is on the rise in Venezuela, where hyperinflation runs rampant. According to Bloomberg's cafe con leche index, the country's inflation has reached an alarming rate of 6,078% for the last six months. In these dark times, many Venezuelans have turned to cryptocurrencies as a safe store of value.
Bitcoin and other cryptocurrencies like ether and dash are now widely accepted at gas stations and supermarkets. However, despite bitcoin's popularity, the US dollar is still the nation's go-to currency, despite government efforts to counter this.
It has been reported that lower-denomination USD are particularly scarce. Some citizens are willing to trade a $10 bill for eight $1 bills. Another indicator of the dollar's dominance is that prices are listed in USD rather than the local currency, bitcoin, or another crypto.
Bitcoin allows people to opt-out of the traditional financial system where all the power lies in governments' hands. When the elusive figure Satoshi Nakomoto designed Bitcoin, he knew that people needed some form of protection from poorly run governments.
At CoinFlip, we believe that the economy works best when it works for everyone. As it stands, it is not working for the billions of people around the globe that are dealing with extreme economic instability. Bitcoin and other cryptocurrencies are a promising solution by allowing people to become their own bank - free from the oversight of corrupt governments and the effects of hyperinflation and currency devaluation.
While we are lucky to have a stable currency in the United States, we are not immune to political unrest and financial uncertainty at the hands of dishonest political actors. This is why CoinFlip is so passionate about promoting financial inclusion through safe and convenient access to cryptocurrency.
Bitcoin's technology is revolutionary because it means we no longer have to rely on governments to keep our money safe. Have you jumped on the bitcoin bandwagon? What are the reasons that you invest in cryptocurrency? Feel free to let me know on Twitter!