How Bitcoin Can Help Developing Countries Counter Inflation
Bitcoin is a common word today. You are probably among the millions worldwide who have come across the term. You may also be among the few who understand what it means. Anyway, you should know that Bitcoin is the leading cryptocurrency in the world. It is a decentralized digital currency. Major cryptocurrency exchanges, such as British Bitcoin Profit, provide a variety of ways to buy bitcoin.
Bitcoin is different from your typical fiat currency in many ways. To begin with, it is not in a physical form like coins or notes. Instead, it is in a purely digital format. Moreover, it is a decentralized currency that no government, bank or individual entity controls. Through the central bank and other financial entities, the authorities control and monitor your bank and even cash transactions.
Bitcoin and developing countries
Developed countries adopted Bitcoin much earlier than developing countries. And this has made Bitcoin use more widespread in the former than in the latter. However, recent data indicates that the rate of use of Bitcoin is higher in developing countries today than in developing countries. Countries such as India and Kenya are leading examples.
A major factor driving developing countries to adopt Bitcoin is its potential to help them overcome some fundamental economic and financial challenges. Some of these significant challenges include low financial inclusion and high inflation. Even in the nascent stages of adoption, Bitcoin has proven that it can help developing countries overcome these issues.
Today, thanks to Bitcoin, a significant number of people in developing countries who could not have or access to banks and other financial services are covered. With Bitcoin, people do not need documentation and other unnecessary requirements that banks require. Access to Bitcoin requires an internet connection and a Bitcoin wallet.
Countering inflation
Inflation occurs when the prices of goods and services increase while the value of money does not. And this means that when inflation rises, you cannot buy the same amount of goods or services with the same amount of money as you used to. In developing countries, inflation is a significant problem characterized by a complex web of factors.
One way Bitcoin can help developing countries combat inflation is by providing an alternative to fiat currency. As mentioned in the introduction, Bitcoin differs from fiat currency in several ways, although it often serves the same purpose. So instead of having or using US dollars to pay for goods and services, people can use Bitcoin instead. Bitcoin is not subject to government regulations and other disturbances that cause inflation.
Bitcoin is more convenient than fiat currency or gold to hedge against inflation. It is more accessible even to the common person. You just need to use your fiat currency to buy some Bitcoins and you are good to go. Additionally, Bitcoin is more stable than fiat currency. Since it has a fixed supply, Bitcoin is quite resistant to inflation. No government or entity can increase or decrease supply to change its value.
Finally, Bitcoin is an internationalized digital currency. Unlike most fiat currencies, Bitcoin is not subject to national politics. And this means that Bitcoin provides a better option than local or national currencies to counter inflation. Federal or local issues that may cause inflation in the national or local currency will not affect Bitcoin itself.
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Developing countries should use Bitcoin as an important hedge against inflation. Bitcoin offers some unique qualities that make it more practical, stable and resistant to inflationary factors at the national or local level.