Cryptocurrencies could be an option in the event of a possible devaluation of some fiat currencies. This was hinted at by Argentina, an article by Ámbito published on May 22nd.
The Ámbito publication stated that multilateral organizations such as the International Monetary Fund, the World Bank and dozens of central banks around the world have shown that the impending economic crisis is serious. “Until now, A 3% decline in the global economy is expected. “the article noticed.
“The world’s governments have done everything they can to appease the economic impact of the pandemic, but the truth is that in some cases, the State measures to stimulate markets can then trigger inflation, devaluation and other elements typical of an economic crisis“They added later in the above publication.
They also pointed this out The most widespread measure so far is the capital injection into the markets, which is simply a money issue. And they made it clear that printing money without support to deal with the crisis is a short-term solution. In the long run, however, it is a measure that creates inflation and causes currencies to lose value. “The equation is simple: the more quantity of a good (e.g. money), the less value it will have, since the fact that there is more quantity implies that it is now easier to access,” they commented Ámbito.
It is not uncommon for citizens to look for another asset or currency that is stronger as an alternative or refuge for value when a currency loses value.
With this in mind, Camilo Rodríguez Blanco of the Crypto Rocket Group recently said about Cointelegraph in Spanish:
“In terms of bitcoin, it’s an alternative. Automation and value hoarding have been around since the birth of Bitcoin. The pandemic we are currently experiencing has only accelerated the inevitable. The solution isn’t just technology. I think it takes a change in government thinking and a broader understanding in the country for society to understand its meaning. “
Juan Pablo Thieriot, CEO of Cointelegraph, also said in a Spanish interview:
“I see huge potential in Bitcoin and cryptocurrencies for Latin America. Especially in the countries where changing and unclear economic rules are played with, with rampant inflation and the resulting loss of purchasing power for people. Access to cryptocurrencies or Bitcoin is becoming very valuable Not only because of speculation, but also as a means of preserving value, regardless of the trustworthiness of local governments. Latin America has shown great acceptance of cryptocurrencies and Bitcoin. Thousands of new users from Latin American countries are created on our platform every day, which is the high Shows potential. “
And I add:
“In countries with such changing economies, where the depreciation of local currencies, backed by governments with low credibility, with so much inflation that people’s purchasing power suffers over the course of the day, cryptocurrencies play a fundamental role in helping To preserve or even increase value “.
Combined with a scenario of the global crisis due to the Covid 19 coronavirus pandemic, which takes place at an economic and financial level in countries such as Argentina, Venezuela, Lebanon, Zimbabwe or Iran, this clearly shows that it is Fiat money for its residents become problematic. Inflation and certain government measures have made it difficult for ordinary people to dispose of their money without losing purchasing power.
Back to the Ambit article, they thought In a crisis scenario, cryptocurrencies could be an option to protect money. “However, when it comes to crypto, the volatility factor has to be taken into account. Any external event that affects the relationship can have a huge impact on the price of one or more cryptocurrencies, “they clarified.
In any case, various crypto alternatives have emerged. Some of them, for example stable coins, only tie their value to other assets (for example the dollar) to avoid the feared volatility.
Regarding stable coins, economist Jorgelina Echavarría did the following:
“To preserve the value of their assets, savers prefer to keep their capital in a stable currency like the dollar, without being tied to Bitcoin’s uncertainty. In the crypto world, this function is performed by stable coins because, like the Argentine peso, they serve as protection against the depreciation of the currency and maintain a 1: 1 parity against the dollar. Another feature of this market is its practicality, as it works 24 hours a day, seven days a week and with no spread between buying and selling. “
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