Victor Ugochukwu · Dec 14, 2020 . 5min read
Inflation to drive Crypto Adoption Globally
Nations are battling with hyperinflation. With high inflation rates countries globally are adopting and regulating digital currencies and crypto.
By Komal Joshi · Aug 4, 2020 . 8min read
Nations are battling with hyperinflation. Venezuela ranked No.1 in 2019, according to the latest data released by Statista. It had a shocking inflation rate of 19906% in 2019. Zimbabwe bagged the second spot with an inflation rate of 255%. Argentina ranked third with a 53% inflation rate. A higher inflation rate had a negative impact on their respective currencies. The Venezuelan Bolivar depreciated more than 1000% in less than a year against the US dollar. Moreover, the Argentinian Peso depreciated around 50% in the last year.
Hyperinflation and a weak national currency unlock the door for digital innovation. And what’s better than the cryptocurrencies? Crypto commenced with a research paper in 2008. Satoshi Nakamoto published a paper with the title “Bitcoin: A Peer-to-Peer Electronic Cash System.” Nakamoto developed Bitcoin as a peer-to-peer version of electronic cash. It allows payments to be sent from one party to another without a third party’s involvement.
So, the problem here is the relationship between inflation and cryptocurrencies. Well, inflation is boosting crypto adoption significantly. Following then, there were only two choices for those investors, Gold and the US Dollar. The popularity of Bitcoin and other crypto-assets is now making a rapid adoption of crypto in the countries of the high inflation rate.
Crypto Adoption in Venezuela
Venezuela’s national currency, the Venezuelan Bolivar decreased by more than 1000% upon the US Dollar. The country’s inflation rate helped non-traditional investment tools take centre stage. Crypto adoption in Venezuela is booming. According to the latest report, more than 20,000 businesses in Venezuela accept crypto as a mode of payment. It includes a Burger King branch in the capital city of Caracas. Hyperinflation makes it challenging for local shops and merchants to store Venezuelan Bolivar, thus making cryptocurrencies a much more stable medium of exchange. Data from LocalBitcoins shows that the trading volume of Bitcoin touched an all-time high in July 2020.
Crypto Adoption in Argentina
Argentina suffered from a high inflation rate of 53%, weak economic policies, political turmoil, and debt default. It stimulated the currency depreciation. Argentinian Peso, the national currency, lost more than 50% of its value in 1 year. Bueno Aires is not just another tourist hotspot; it’s increasingly becoming the Bitcoin hotspot. More than 100 merchants in Bueno Aires now accept Bitcoin. There are 11 Bitcoin ATMs in the city. Bitcoin trading volume in Argentina reached a record high this month.
Crypto Adoption In India
According to the data released by Statista, the inflation rate in India was around 4.54%, in 2019. Many developed nations have already recognised and regulated cryptocurrencies. Despite numerous advantages, India is yet to acknowledge digital currencies. There is a small section of society that carries an incorrect notion – that transacting in digital currencies aid in criminal activities. The adoption of crypto will help the government to achieve a five trillion-dollar economy.
Inflation played a significant role in crypto adoption. Most countries are experiencing rapid inflation. It reported higher trading volumes in Bitcoin and other cryptocurrencies. Depreciation of national currency prompted investors and small businesses to store value in crypto assets. It helps to hedge against the devaluation of local currency. The expanding popularity of crypto assets during these problematic times shows a roadmap to even greater adoption.