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Cryptocurrencies can be a powerful tool in protecting your funds against hyperinflation. There are pros and cons at the same time. In an interview on The Late Show with Stephen Colbert, Reddit co-founder Alexis Ohanian said yes. He believes cryptocurrencies can be an effective tool in protecting your funds against hyperinflation. The reason he prefers cryptocurrency over regular fiat currency lays, in fact, that ”Cryptocurrencies are fuel for a potentially new internet”, as he said.
Ohanian told: “Things like Bitcoin and cryptocurrency are an opportunity for us to have a store of value that is not backed by a single country.” Further, he told that cryptocurrency gives people the ability to control their own money without any fear of forceful government intervention – especially in countries dealing with unstable political and economic predicaments.
“We sort of take it for granted the fact that we all have bank accounts, and we move money here and there, but for so many people in the world to have actually this security of knowing that what is yours is yours, because it is now digital, could be transferred with you wherever you are going, is actually pretty empowering,” said Alexis Ohanian.
Ohanian’s viewpoint is that Bitcoin can still offer more stability than the fiat currencies of countries struggling with hyperinflation in spite of the highly volatile nature of cryptocurrencies. He recently made headlines with his predictions about the price of Ethereum and Bitcoin. A few weeks ago, the Reddit co-founder made a prediction that the prices of BTC and ETH (respectively) will reach $20,000 and $1,500 by the end of the year.
Many are willing to say that this is an extravagant or pretty baseless prediction.
But do you remember the end of last year?
And Ohanian is not the only Silicon Valley entrepreneur who is bullishly optimistic on cryptocurrencies. Twitter co-founder Jack Dorsey has also previously expressed believes that Bitcoin will be the world’s primary currency by 2028.
The idea of utilizing cryptocurrencies to fight hyperinflation has been explored in multiple countries.
Such experience has in Zimbabwe, Venezuela, and Argentina.
Many people turn to cryptocurrencies during hyperinflation in wish to save themselves from losing their money. This sometimes temporarily drives up the local buy price of the cryptocurrencies.
We will see.
For now, the fact is that cryptocurrency gives people the ability to control their own money without any fear of forceful government intervention. Especially in countries dealing with unstable political and economic predicaments.
Contrary to this Bank of America CTO said that Bitcoin wasn’t ”transparent in the financial moment of money.”
That is totally strange because the definition of blockchain is – a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly – so they have to realize that Bitcoin is much more transparent than the current banking system.
Many world big companies such as JP Morgan, Goldman Sachs, Bloomberg, New York Stock Exchange or NASDAQ jumped into crypto.
Is the Bitcoin solution for protecting of hyperinflation?
As you can see some experts say YES, some NO.
On an example of Venezuela, we may try to find the answer. Venezuela created its own cryptocurrency in order to try to get out of the crisis and they named it – petro. But, it is not like other cryptocurrencies.
The name Petro is a kind of program of that currency: the value of each petroleum will be covered by the crude oil barrel. In addition, as President Nicolas Maduro has announced, as currency insurance other raw materials are used. The “petro” came in response to the Venezuelan authorities’ financial blockade and sanctions, and this is not about ordinary blockchain, but its value is based on state reserves of oil, gold, gas, and diamonds.
Cryptocurrencies against Hyperinflation
Two months later, Venezuela offered to sell its crypto, and currently, about 82 million tokens are available, which the government could sell next months. The plan for the sale of the ”petro” currencies is on the website, which was created specifically for this occasion, and the price of one unit depends on the price of one barrel of Venezuelan oil.
President Maduro’s plan to deal with the economic crisis continues, and it is still expected that Petro will affect the economy of Venezuela, and becomes an alternative to the physical currency.
OK, Venezuela seems to have broken a common financial law: in the world’s oil trade, the price is always calculated in dollars. But that is the other view of problem.
Will it is helpful to Venezuela or not we will see. Intention to create their own cryptocurrency has some other countries faced with hyperinflation such as Zimbabwe and Argentina were. On the example of Venezuela, others will make decisions. The point is: can cryptocurrencies be instrument or way to beat hyperinflation?
Alexis Ohanian and many other experts said yes.