Inflation has become a headache in recent times. As the prices were going high and the value of the currency was going down.
This can create a problem for people to afford their basic needs and thus ultimately lead to an economic fluctuation. Bitcoin has never been a solution to this problem, especially in developing countries.
The answer would rely on several factors. The fact cannot be denied that Bitcoin is fighting against inflation in developing countries.
Its decentralized nature and availability on a global scale. Bitcoin is an alternative to the traditional currency system like this app which is manipulated by the government and central banks as well.
Well, the reply to the query would depend upon a number of factors. Although it is difficult to say that the bitcoin potential is helpful for combat inflation in some countries which are in the developing stage.
Justifications: Why Inflation Is A Problem In Developing Countries
Poor people get so much affected by inflation. It is because most of their income is spent on household essentials like food, grocery, fuel, and many more. But after inflation, these things become more expensive.
As a result, poor people won’t be able to spend their money on other extracurricular agendas or are not even allowed to reduce their essentials list so as to make it possible to earn their life essential profits at least.
Even if someone tries to save money, their value reduces and further investment becomes difficult to manage.
The reason is when the prices rise, the power purchase cost imposed on savings decreases however and thus savings also reduces.
As a result, the business found it very difficult to grow and job options also became limited. And hence it encourages more poverty.
Counties In the Development Phase Are Able To Configure The
Inflation Problems.
Use of price fixation:
during the procedure, the crypto prices were sealed by the government on some specific things so as to further help them to keep the prices of the allover things on their ground level so that everyone poor or rich can avail those facilities in their daily needs.
But it could be a reason for a shortage of services in case some businesses do not enhance their cost over their own cost.
Use of financial policy –
This indicates that government organizations convert their interest amount rate and money supplied so as to further regulate inflation. Whereas due to being potentially adequate, it can also lead to economically unstable.
As compared to fiat currency, bitcoin is not as stable and in control therefore it can be used as a mode of payment without worrying about inflation. Bitcoin is also able to transfer money without imposing any charges.
Problem Occurred Due To Inflation
Every third country of the world has to face inflation rates due to corruption, financial imbalance, and currency diminishment as well. However, it could be possible to help high inflation in some ways:
- As bitcoin is a decentralized currency therefore it is not in control of the government and other central banks. thus, it is ultimately out of pressure due to inflation.
- As bitcoin is in scarcity. Its supply is limited and available only with 22 million coins. This value remains high due to low availability and thus hedges against inflation.
- Bitcoin is easy to transfer and save as well. So people feel it is easy to store and invest without the fear of being stolen by someone. Hence Bitcoin is preferred by most people.
- Bitcoin is in high demand as several businesses and organizations are beginning their business to use bitcoin as a mode of payment in their field.
Conclusion
Although bitcoin is beneficial for every third world country and also easy to obtain other than fiat currency. The fluctuations are not the same as in other countries to make it more stable to store the value.
The money transfer is also free of charge. It also does not involve government pressure due to its decentralized nature. Hence all these factors make it out of danger from inflation and hence highly acceptable in every field.
