I feel like most people view cryptocurrencies as something that is not mainstream yet, but these types of coins can actually be used to fight inflation. Currency values are changing constantly and artificially – if you look at any current newspaper, check outalike websites, or read the newspaper, this trend is plenty clear. Learn what cryptocurrency can do to fight inflation in the article below by reading on!

 

What is the current inflation rate?

 

Inflation rates in developing countries recently reached a high of approximately 46%, so exploring methods to lower inflation with cryptocurrency is no longer just an exotic idea. Unfortunately, many established currencies like the US Dollar and the euro have been experiencing increasing inflation rates since 2000 – mainly due to the reduced ability of their governments to properly manage the economy. Inflation is the increase of the rate on all prices of goods and services in a country to an increase in its general price level. It is calculated as the yearly percentage change in price indices such that the consumer price index (what is often used) rose 2% annualized after removing food and energy price increases.

As of July 2018, China has a 1.7% annual rate, while Zimbabwe has 432% per annum inflation The current inflation rate is two percent; the previous year was four percent. Cryptocurrency functions much like a commodity, so if the value in your local currency decreases, you will see the value of your savings decrease and your purchasing-power decrease as well. Investments need to be made in cryptocurrency as soon as it’s not just speculative When the economy suffers, it’s common for consumer prices to rise by nearly a percentage point per month. This is because of things like supply and demand, or deflationary pressures which causes currency devaluation. Enter cryptocurrencies: these digital currencies aren’t subject to this inflation—they’re designed to keep their value constant and maintain constant growth.

 

How does cryptocurrency drive down inflation rates?

 

Cryptocurrencies, like any other type of currency, exist on a decentralized network, which prevents them from the potential devaluation that might come with government taxation or control entering into the markets. As cryptocurrencies grow and take over traditional currencies in countries like Brazil and Venezuela this question has arisen as to what we can do to fight inflation by pursuing cryptocurrency. If a country wants to fight inflation, it can stabilize its prices by implementing policies known as pegging. Pegging prevents the government from printing more money and essentially slows down wealth destruction related to inflation. This is especially helpful when cryptocurrency is implemented into taxation. See how people who earn money through cryptocurrency are only taxed once if they own a certain amount of cryptocurrencies compared to those who have their income partly in fiat, which is taxed twice.

 

Can cryptocurrency really fight Inflation

 

Cryptocurrency is a commodity digital currency that allows people to exchange money without a central authority. With the onset of cryptocurrencies like Bitcoin and Litecoin in 2017, users were able to escape the instability imposed by traditional currencies. Something most users find desirable as They plot to save their money from inflation or gouging increases inflationary prices. Many analysts point out, however, that other hard assets such as gold are equally as valuable in fighting inflated rates of prices. Probably not in the near future, but there really is an answer.

 

 

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