The global economic roller-coaster ride has been bumpy as of late. Economic uncertainty is a constant topic affecting governments and central banks. The 2008 financial crisis caused many countries to devalue their currencies but now there is a threat of countries re-unpegging their currency which would cause prices to skyrocket. The EuroZone is in a short-term vicious cycle of economic uncertainty. China’s economic growth is at a standstill, and the Yuan’s value is dropping.
Cryptocurrency could be a means of salvation for both countries and their populations. To prop up a weak economy, an artificial industry of owning cryptocurrencies would incentivize citizens for relative stability. Similarly, as more people invest in cryptocurrencies, the price of cryptocurrencies also increase and increase the value of their holdings.
In the meantime, cryptocurrency is becoming a means of utility. Bitcoin isn’t worth anything or worth less until it’s spent. Once cryptocurrency becomes mainstream, a currency that doesn’t yield interest and is taken out of circulation in order to maintain stability becomes prudent. Cryptocurrencies such as Bitcoin could potentially become a way for developing countries to skirt away from the economic downturn and a way for developed countries to balance themselves out during an unstable period.
What would happen if a government decided to re-peg its currency to the US Dollar or Euro?
A country who decided to re-peg their currency wouldn’t be able to maintain stability in their government. Purchasing in the economic climate and trying to create an artificial industry would lead to insurmountable debt. This would eventually result in hyperinflation, devaluing of currency, and even usurping of power from the government.
Bitcoin, as a currency, is possibly the only way to buffer the fluctuation of an unsteady economic decree. It might be even better than gold since gold price volatility has been much more volatile than Bitcoin’s. Some say the price of gold is artificially high because of speculation from market manipulation and paradox. In a perfect world, cryptocurrency would be a way to level the playing field and help for some of the worst affected governments and its population.
Economically at risk countries such as China and France have been under threat before and know difficult it is. Economically powerful countries such as United States have been able to weather tough times easily but for a developing country, the long-term effects might be devastating. With cryptocurrency on the rise, it’s an option that could be the safety net we are looking for.