Usually, people use fiat currency a.k.a. standard money to make payments in their everyday life. However, due to numerous factors, such as an economic crisis for example, fiat currency can quickly lose its value. When that happens, cryptocurrencies can serve as an alternative payment method. So here’s when Bitcoin jumps in to save the day.
Bitcoin as a main form of money
In times of stability, Bitcoin is usually recognized for its niche appeal, attracting the attention of crypto enthusiasts, early adopters, and investors alike. Although this is helping Bitcoin gain adoption, Bitcoin is revealing its true potential in countries that are experiencing an economic crisis. In many troubled nations, Bitcoin is now a viable alternative to traditional money.
Bitcoin thrives when fiat fails because the two are not subject to the same pressures. Fiat currencies have value because they’re backed by national governments. This works well in economically sound times, but falls apart during an economic crisis. By contrast, Bitcoin’s value is generated by a worldwide network, which cannot be affected by events in a single country.
Although Bitcoin’s price regularly fluctuates, those changes pale in comparison to the hyperinflation that some countries are experiencing. Across the world, economic crisis’ are causing endless inflation. When this happens to a country, the spending power of its fiat currency declines dramatically. Although nobody wants to be in this situation, Bitcoin has given some people a way to avoid the instability of fiat currency and seek out alternative forms of money.
Bitcoin becomes an alternative payment method in real life
Let’s start with Venezuela as an example. Hyperinflation, together with with doubtful economic policies, is devastating the population and many people are using Bitcoin as an alternative payment method. In fact, Bitcoin trading is now at an all-time high in Venezuela since earlier this year. Around February, Venezuelans were trading about $9 million worth of Bitcoin per week. Furthermore, this accounts for only some of Venezuela’s crypto use, as Bitcoin competitors like Dash are also gaining popularity for micro-payments in the country.
Zimbabwe is in a similar situation. For years, Zimbabwe has suffered from severe hyperinflation, which has rendered its Zimbabwean dollar virtually worthless. As a result, many people in the country have turned to Bitcoin. And although Zimbabwe attempted to ban Bitcoin last year, the ban only affected banks, exchanges, and financial services. Individual citizens are still using Bitcoin today thanks to its continued purchasing power.
The bottom line is that Bitcoin and other cryptocurrencies can provide very effective alternatives ways of spending and storing money — especially if a country’s citizens collectively adopt the cryptocurrency. Several countries, including Zimbabwe and Venezuela, have already proven this is possible. Even in the face of overwhelming economic problems, Bitcoin has demonstrated that it can maintain an edge over fiat currency.
Thanks for reading! I’d love to hear your thoughts, so comment below!
Say Hello on Twitter