Industry Technology

Cryptocurrency Remains Safe Haven as Economies of Venezuela And Turkey Collapse

Nick Chong | September 4, 2018 | 12:30 pm
Cryptocurrencies
Industry

Cryptocurrency Remains Safe Haven as Economies of Venezuela And Turkey Collapse

Nick Chong | September 4, 2018 | 12:30 pm

Critics of crypto often talk down on this asset class due to its volatile nature and price instability/unpredictability, however, in countries prone to economic instability, crypto assets can prove to be a safe haven in periods of rampant inflation and flawed monetary policy.

Crypto — An Unexpected Safe Haven In Times Of Economic Distress

The citizens of Venezuela have indisputably had a rough year, with their Venezuelan Bolivars inflating by upwards of 100,000% to become nothing more than paperweights. Although President Maduro is making moves to combat hyper-inflation (which are failing, by the way), some claim that it may already be too late, as citizens throughout the South American country have already fallen into financial ruin.

Keeping this in mind, Xen Baynham-Herd, the Head Of Strategy at Blockchain, recently brought up an interesting point about how digital assets can operate as an alternative to “stable fiat currencies or safe haven assets (gold).”

Taking to Twitter, Baynham-Herd wrote:

“Regular people in inflation-prone countries like Venezuela, Turkey, Iran, and Zimbabwe are seeing their life savings disappear. They don’t have easy access to stable fiat currencies or safe haven assets. This is why we need stable digital assets that are universally accessible.”

While it is widely accepted that “stable digital assets” or stablecoins, as they are more well-known, can be a valid alternative to “safe haven assets (U.S. Dollar, a bar of gold, etc.),” there are some individuals that claim that regular cryptos fit the role just fine. As reported by NewsBTC previously, Bitcoin has outperformed three government-issued currencies year-to-date, even though the price of the foremost crypto asset has not fared well in recent months.

So although Bitcoin has tumbled from $17,000 to $7,300 since the start of 2018, if given a choice, citizens in hyper-inflating economies would rather take the brunt of Bitcoin’s volatility then see their fiat lose purchasing power in front of their very eyes. This evidently explains why citizens in Venezuela and Turkey have recently sought solace in cryptocurrencies as a way to preserve their assets and to buy and sell items without a government intermediary in fiat.

What’s next, however, is making cryptocurrencies universally accesible for the over seven billion individuals on this planet, as this will be sure to drive the adoption, growth, and maturation of this world-changing innovation.

Venezuela Is Down, Could The U.S. Be Next?

Although the U.S. dollar and crypto have proven themselves to be invaluable assets in Venezuela, Kim Dotcom, a well-known entrepreneur, “internet freedom fighter,” and anti-government proponent, claims that the U.S. dollar is also subject to losing a majority of its value. In a tweet that gained traction across the cryptosphere, Dotcom wrote:

This belief may seem like irrationality at its finest, but with U.S. federal debt racking up like no tomorrow, many believe it is just a matter of time before the American government will have to default on its over $20 trillion of debt. Following this speculated event, proponents of both anarchy and blockchain-backed assets claim that worldwide legacy markets will collapse, leading to a society where the use of cryptocurrencies is the norm. Some cryptocurrency advocates aren’t so cynical, claiming that the widespread adoption of cryptocurrencies can be had via the gradual development of these assets.

Regardless, one thread remains, which is that cryptocurrencies will eventually hit the public spotlight as a tool that can be used in day-to-day activities.

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