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From Hyperinflation to Crypto: The Search for Wealth Preservation in an Era of Asset Bubbles & Crippling Economies

The Bloomberg Misery Index — When hyperinflation and unemployment rates soar

“In 2014, Venezuela’s inflation rate hit 69%, the highest in the world. The following years, the country kept on shattering records, with hyperinflation soaring year after year, reaching an astounding 1,700,000% in 2018.”

— Central Bank of Venezuela

The Bloomberg Misery Index 2020 featuring the top 5 most and least miserable economies out of 60 countries. Source: Bloomberg.
The value of one U.S. dollar in Venezuelan bolívares fuertes (before 20 August 2018) and bolívares soberanos on the parallel (or black) market through time. Vertical lines represent every time the currency has lost 90% of its value, which has happened eight times since 2012. The graph shows that as of March 2020, the currency is worth 750 million times less than it was worth in August 2012. Since the beginning of the presidential crisis in Venezuela in January 2019, the curve has been less steep than previously, meaning that the rate at which the value is lost, inflation, has slowed down. Source: Wikipedia.
The inflation rate of the Argentine Peso reached over 20% in the last 12 months alone (September 2020 data); Source: XE.com
History repeats itself. During the Weimar hyperinflation event of the early 1920s, wheelbarrows replaced wallets….

The search for safe haven assets

Price performance of gold over the period 1973–2020. Source: Goldprice.org
Zoom in on price-performance of gold over the period 2011–2020. Gold has only just come out of its bear market since mid 2020. Source: Goldprice.org
This graph shows how stock market prices rise when the Fed goes into Quantitative Easing (QE) mode, and how they fall when the program stops or is reversed (Quantitative Tapering /QT). Source: Real Investment Advice.
Nasdaq 100 performance since the 2008 market crash looks similar as typical asset bubbles, continuously posting new all time highs since 2011 (performance shown is from a QQQ ETF, which tracks the movements of the Nasdaq100). Source: Tradingview chart analysis.

Do cryptocurrencies show potential as a safe haven?

Bitcoin is a deflationary asset. Total number of minted bitcoins and projected bitcoin inflation rate. Source: github.

“Venezuela represents an excellent example of what drives cryptocurrency adoption in developing countries and how citizens use it to mitigate economic instability. Our data shows that Venezuelans use cryptocurrency more when the country’s native fiat currency is losing value to inflation, suggesting that Venezuelans turn to cryptocurrency to preserve savings they may otherwise lose.”

Source — Chainalysis (“The 2020 Global Crypto Adoption Index: Cryptocurrency is a Global Phenomenon”)

Stablecoins as a store of value

Central Bank Digital Currencies (CBDC)

But is holding crypto safe?

Growth in the number of unique blockchain portfolios is still growing parabolic in 2020. Source: blockchain.com.

Securing your crypto the right way

The NGRAVE ZERO hardware wallet is the most secure digital asset wallet in the world, and the only one to achieve the EAL7 security certification for its secure OS.

”NGRAVE’s product suite was created to empower users to truly own what is theirs, i.e. they should be the true owners of their digital assets and also the ones who decide if a third party should ever have access to a private key or not.” — Xavier Hendrickx, CTO NGRAVE

Conclusion

Also, Read

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Ruben Merre

Co-Founder & CEO NGRAVE | www.ngrave.io | Protecting Your Private Keys From A — Z. The Coldest Wallet.