With the decline in economic growth and a high rate of inflation in third world countries which continues to lower the purchasing power of traditional currencies and in turn lower the value of personal savings, there is a growing concern of how valuable fiat currency would be in the nearest future mostly amongst the salary earners as the inflation rate is constantly on the rise whereas their paychecks has remained the same.
The economic trajectory of some underdeveloped nations of the world, most especially in Africa where the inflation rate seems unmanageable, one wonders what could be an alternate means to preserving the value of personal savings with the high level of inflation witnessed in this part of the world. However cryptocurrency assets such as bitcoin could withstand inflation and thus could serve as a hedge against inflation.
Can Bitcoin Be the Perfect Hedge Against Inflation?
At a time when most economies, assets, and fiat currencies suffered due to the onset of the coronavirus, bitcoin and other crypto-assets remained relatively stable. They even saw increased adoption as people saw more value on these assets. The question now is can bitcoin serve as the perfect hedge against inflation and help preserve personal savings?
Bitcoin is unequivocally the most certain asset on the planet that has withstood unprecedented economic turmoil. Nigeria and Zimbabwe are two African countries where it’s citizens turned to bitcoin as a hedge against inflation and preserve their savings, however not only in Africa have people turned towards bitcoin to fight against inflation. Venezuelan citizens have also adopted Bitcoin to combat hyperinflation.
Bitcoin as an asset has its strong values and people invest their fiat currency in bitcoin to prevent their money from losing value and it is expected that bitcoin adoption amongst institutional investors and major companies in no time will be on the rise. And there are several exchange platforms where one can buy and sell bitcoin today as bitcoin is ticking all the right boxes as a hedge against inflation even though I have to acknowledge that it’s volatility remains a concern.