Can Crypto Stop Inflation?

The cryptocurrency industry and specific currencies which can be mined via have assumed a variety of duties during the previous 13 years with blockchain technology. Introducing a more legit payment system, choices for decentralized banking and ways for artists to safeguard the rights to their creations, blockchain technology is now making an effort to make itself the next development in the development of the internet itself.

The term “inflation” means exactly what it says.

Simply put, inflation is defined as the process by which a nation’s currency gets devalued as the cost of goods and services increases. Governments frequently find themselves forced to print more currency than they need whenever the economy is struggling. However, they are unable to wait for the existing cash to return in an emergency.

Following a pandemic such as the COVID-19 pandemic in 2020, several businesses either completely shut down, reduced their workforce, or were compelled to stop providing activities for an extended period. As a result of this order to stay indoors, several employees lost their positions or were compelled to stop turning up to work as the business went into hibernation. Unless they were fortunate enough to obtain a job that permitted them to work from home, many people stopped earning money. Governments were forced to distribute monetary aid for their citizens to survive in these appalling conditions.

Protection from inflation

Because bitcoin is a deflationary asset, people in nations having insecure fiat currencies are utilizing it more and more as a store of value to guard against hyperinflation and rising prices for basic goods and services. Cryptocurrencies, unlike fiat, can’t be as easily manipulated by increased money production and interest rate changes. Most significantly, because there will never be more than 21 million bitcoins created, it is a desirable inflation-resistant store of wealth. Despite the rise in popularity of Bitcoin over the past year, there is an ongoing debate about the volatile nature of the cryptocurrency market.

The volatility of the crypto market is debatable.

According to detractors, the overall price growth in cryptocurrencies during this period of time is the prime driver of this rising institutional investment in the sector of cryptocurrency. For instance, Bitcoins still was ahead 2% during the year despite a sharp downfall from its most current all-time great of nearly $30,000 in July. The yearly gain touched 300% in August.

Although many investors came back to gold after Bitcoin’s sharp 45% downfall in May, they viewed cryptocurrencies as a non-proven industry that hasn’t still described it is a sustainable asset class or even a safe refuge store of value. It takes a lot more stability and trust for any asset to be used as both a value store and an inflation hedge.

Could Bitcoin Displace Fiat?

Most detractors believe that using cryptocurrency as a means of payment is its weakest aspect. Kelly from Visa is one of many who has observed that although consumers appear content to purchase, trade, and keep cryptocurrency, they do not appear to be willing to use their funds to purchase goods or services.

Although cryptocurrency pay incentives have so far failed to take off, high gas expenses, long transaction times, and transaction costs are frequently highlighted as barriers to entry. However, alternatives that are conducive to micropayments have been proposed, like the Bitcoins Lightning Network, which is supported by El Salvador’s Bitcoin-inclined administration led by President NayibBukele.

Following the adoption of BTC as legal cash by the government of Bukele last year, hundreds of tokens have been purchased using public monies. This means that cryptocurrency is currently being tested inside the Central American country as both a payment method as well as a reserve bank reserves asset (a store of value).


Although inflation is a complex economic notion which can be either be positive or negitive, the consensus is that when it grows too high and becomes out of control, it is destructive. Although the Coronavirus pandemic obstructed businesses from functioning throughout the previous year, inflation remained stable during those times. However, it is predicted to grow shortly as the rise in consumption will lead to expansion of economy. Bitcoin can be extracted by and other cryptocurrencies have defined over the last ten years, like one among those assets, they have utilized when there was inflation.

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