HOW BITCOIN AND CRYPTO CAN BE A MEASURE AGAINST HYPERINFLATION AND CAPITAL CONTROLS FOR SOME PEOPLE

One of the virtues of Bitcoin and Cryptocurrencies is that they grant freedom to their users in the sense that they can have complete autonomy over their “money” or virtual assets without the need of a trusted third party (banks, governments, etc.). Financial inclusion also plays an important role, in a world where around 2 billion people are unbanked and thus have limited or no access to the financial system, this technology is an option for this excluded population.

The freedom and flexibility that this blockchain technology provides can be used as an effective countermeasure by people who live in countries with hyperinflation or strict capital controls. Let’s make two examples for each one of these circumstances.

Example 1, let’s say a person from South Africa and is looking to immigrate to another country. Probably the first thing one might do is to sell their house so they can take their money to the country they will move to, let’s say to Panama for the sake of this hypothetical case. The person sells the house and deposits the proceeds in their bank account in RSA. The next step probably would be a wire transfer of those funds to a bank account in Panama to receive US dollars there, but there is a catch, South African exchange control regulations determine and dictate how much and under what circumstances you may transfer YOUR money out of South Africa. Capital controls can restrict people’s freedom and choices, in this story the person could purchase Bitcoin with their Rand in South Africa and change some or all of it into USD in Panama either through an exchange or directly and deposit the dollars into their bank account in Panama (or use the Bitcoin to pay for goods or services there).

Example 2, for the hyperinflation example, let’s think about Venezuela where inflation could hit one million percent this year in the estimation of the IMF. For people who live in countries with stable currencies, the price of Bitcoin and cryptocurrencies can be viewed as “volatile”, but if you live in South Sudan or Venezuela, Bitcoin price variation would look rock solid compared to your national currency. Based on the state of the currency available to people in Venezuela, Bitcoin and Cryptocurrencies can be an option worth considering to offset hyperinflation and the rapid devaluation of their money.

https://www.theguardian.com/world/2018/jul/25/venezuela-inflation-crisis-nicolas-maduro

These are two quick examples of how economic freedom and technology can have a big impact in people’s lives, breaking the chains and restrictions imposed on them by their environment or government.

Please take note that this is not financial advice or a recommendation to invest in Bitcoin or other Cryptocurrencies.

Cheers! And remember…
INFORMATION = POWER
chalocryto signing off