The Future of Cryptocurrency in a World of Inflation
The development of Bitcoin and other cryptocurrencies have changed the global financial system significantly
The recent pandemic has spurred many governments around the world to increase government expenditure to support failing businesses. The money supply of most, if not all, currencies have increased drastically as governments put in place several economic stimulus packages and monetary support for firms. This has led to rising fears of inflation, and investors are flocking towards cryptocurrencies, mainly Bitcoin.
Bitcoin is seen as a store of wealth as the supply is generally fixed, limited by the rate of mining which will get slower and slower as verifying blocks of transaction become harder and require computers with higher processing power. In August 2020, the price of a Bitcoin was a little over USD 10000, but it has gone up to USD 60000 in February 2021 and those who own Bitcoin have profited greatly. Compared to gold, Bitcoin is seen to be more volatile and has more potential to be more lucrative, resulting in a lot of money going into Bitcoin.
Cryptocurrencies also come together with the term “Blockchain”. Blockchain is a type of database that comprises of many blocks containing data that are chained together. There are many applications of the Blockchain technology, but in the case of cryptocurrencies, the data serve as a ledger for transactions. The data is spread out across the global network and they “communicate” and “cross reference” with each other to ensure that all transactions are valid. If a single blockchain has been hacked and altered, it will contain data that is different from all the other blockchains and the system will know that particular blockchain has been hacked.
In essence, the blockchain technology has allowed financial transactions to be more direct (peer-to-peer) without an intermediary such as a clearinghouse or a bank. For example, if you want to transfer fiat currency to a friend overseas, you would need to use a third-party service such as Paypal or your own bank’s transfer services. However, cryptocurrency allows us to make transactions directly to each other, very much like sending an email through the internet.
This decentralisation of financial and bypassing of financial intermediaries make it harder, if not impossible, for governments to retain their power to manage money supply or to regulate the economy. As a result, it is very possible that governments will seek to limit the usage of cryptocurrencies, perhaps by making it illegal to use cryptocurrencies for transactions, but they cannot completely shut down the network.
In the current climate of potential inflation, we should take every measure to hedge against a drop in value of fiat currency. I suspect that Bitcoin is a little overpriced currently and there is a risk of the speculation bubble popping. As such, I have looked to newer, alternative cryptocurrencies like Pi.
What we can do is to look to other forms of cryptocurrency while waiting for Bitcoin to be more affordable. Pi Network allows you and me to mine cryptocurrency on our phones without extra battery or data usage — Free of Charge. Pi is developed by a group of Ph.D.s from Stanford University. The purpose of Pi is to make cryptocurrency more accessible for everyone by allowing people to mine it on our phones.
Currently, Pi does not have a monetary value assigned to it. However, there is much potential for development considering Pi’s blockchain is still not finalised yet. Predictions of the future value of Pi ranges from 0.16 cents per Pi to $5 per Pi. Regardless, it is still considered quite low risk as we do not have to put in money to invest in Pi. We just need to download the Pi app and click on it daily to mine Pi. All we need to provide is either our phone number or Facebook login details so the most we lose if Pi goes nowhere is a little privacy.
When Bitcoin did not have a monetary value assigned to it, there were many sceptics who doubted that Bitcoin’s would rise. Look at Bitcoin today. While Pi might or might not become the next Bitcoin, there is no harm in mining Pi. We have nothing to lose and everything to gain. Click HERE to download Pi now! Use my referral code denzilthw to start mining Pi.
