- The US dollar has an inflation of 6.8%, the highest since 1982. and 3.7 times higher than that of Bitcoin.
- BTC inflation is 1.88% per year, a figure that will decrease to 0% over time.
Bitcoin was introduced to the world just over 13 years ago, and has since earned the position as one of the best stores of value that humanity possesses. Even being listed as the best investment asset of the decade.
The non-dependence on a central entity that can control or censor it at its discretion, and its limited number of 21 million units, has made it an attractive “asset” for investors, common people, companies and others.
These unique characteristics, and the fact that already 90% of all BTC has already been minted have led to BTC inflation as low as 1.88% per year, a figure that will decrease to 0% over time.
On the other hand, the currency that has been the basis of the world’s banking and global system for more than 70 years, as it is The US dollar is going through a period of 6.8% inflation, the highest since 1982.
BTC inflation is 3.7% lower than that of the US dollar and this figure has continued to grow for a couple of months now, which has begun to awaken fears throughout the traditional financial world, as it does not seem to be a phenomenon of a couple of months, but could be a long-term trend.
Inflation, a well-known enemy in LATAM
Inflation is a phenomenon that many economic theories define as a symptom of the printing of money beyond the growth levels of an economy.
In short, it is a monetary phenomenon that occurs by flooding the economy with a tsunami of money, generating that the value of this money is reduced, since the mass of bills and digital money has no support. How? In the generalized percentage increase of all prices within a country, or in this case, the world.
This generalized price increase in all goods and services generates that, in addition, inflation is pointed out as the most atrocious tax that a state or government can impose, since no one can escape from it, affecting the population in general.
And boy, in full LATAM we have been a victim of this tax from the institutions that monopolize and centralize the creation of money after the elimination of the gold standard in the 70s.
- Peru
- Nicaragua
- Argentina
- Brazil
- Mexico
- Venezuela
- Bolivia
- The Savior
Virtually all the countries in the region have had problems of high inflation and even hyperinflation over the years. To this must be added the serious social problems and low economic growth that the region presents, at least in comparison with the United States, Europe and Asia.
What has generated that Latin Americans historically have opted for alternatives to local currencies for saving and investment. Be it in gold, hard currencies and investments outside the borders.
Perhaps this is the answer to why Bitcoin (BTC) has had such a good reception in our region. Well, BTC is presented as a non-centralized weapon to LATAM’s historical monetary problems.
Why is BTC inflation lower than that of the United States?
Since the elimination of the gold standard in the 1970s, which in a nutshell limited central banks not to mint money beyond their gold reserves. The printing of money in large economies has tended to infinity.
Especially after the beginning of the Coronavirus pandemic, where the United States and Europe decided to mitigate the negative effects on the economy with the creation of hundreds of billions of dollars and euros without any support.
This behavior has lasted so long and has yielded so many results in GDP growth, that even the great economic schools have developed theories that argued that the printing of money by the large economies was not going to generate trend inflation, theories that bear the names from “The New Monetary Theory” and “Quantitative Flexibility”.
These theories have begun to falter after US inflation has not stopped rising in recent months after the Fed ignored the recommendations of economists around the world to reduce the amount of money they were creating, as sooner or later it would lead to inflation.
On the other hand, we have BTC, an asset whose creation speed is reduced by half every 4 years (halving) being the next one in May 2024. It does not have a central entity that can increase or decrease the amount of BTC at your discretion and with a proven finite offer.
In addition, unlike investing in gold, or access to tax havens, which is only available to a small part of the world’s population. Bitcoin is accessible to everyone regardless of country, sexuality, skin color, religion or political beliefs.
All this generates that the first cryptocurrency in the world is an antagonist in every sense to the dollar and the Euro, as a deflationary asset and that would tend to increase its value over time and Banking and financial institutions, and even entire nations like El Salvador, have already realized the potential of BTC to be a store of value in the event, perhaps inevitable, of global inflation.
- Goldman Sachs has expressed that BTC will hit $ 100,000 and will overtake gold as a store of value.
- Deutsche Bank sees BTC as the perfect asset to hedge against potential global inflation.
Why should inflation in the United States matter to us?
The question our readers may ask is why should inflation in the United States matter to me if I live elsewhere or have no investments there?
The answer is the global interconnection of capitals with the world’s leading economy and lender. Many of the banks in which we have credits, or our State, have investments or safeguard their capital in the United States. In short, the bank of the world is the United States.
This thanks to the fact that said country provides the best security and returns conditions. But when inflation hits the United States, interest rates are likely to rise and capital outflow controls kick in. Thus, the cost of our banks and governments of maintaining investments there will increase and with it the cost of credits in our countries.
This will cause global economic behavior to be negatively affected, causing unemployment, closing of companies and businesses that cannot access the new costs of loans, the increase in credit card debt and others.
In short, if world inflation spreads, it will not be a good investment to have fiat money, because as we explained, inflation will make dollars have less and less value.
Have you already started preparing by saving in Bitcoin?
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