Despite the fact that bitcoin has generally struggled this year, records show that the trading of the cryptocurrency has surged in many parts of the world. An in-depth analysis reveals that countries that are presently experiencing hyperinflation are recording the highest percentage of bitcoin adoption.
The citizens of the aforementioned nations are found to have recognized that the decentralized nature of bitcoin and its maximum supply cap are strong indicators that the cryptocurrency won’t succumb to inflation. Therefore, a lot of people seem to be putting their trust in the efficacy of bitcoin while ditching their local currencies that has struggled to sustain their value.
A few nations are identified to have been significantly affected by this trend of capital flight as their citizens are seeking safe havens to protect their wealth. Each of these nations, having been saddled by their own independent predicament are finding a common landing by the informal adoption of bitcoin. They include:
Iran’s monetary crisis has continued to persist following the US sanction placed on its crude shipments. As a result, Iran’s local currency, Rial (IRR) has lost a third of its value since the beginning of 2018. In order to reduce the effect of the US sanctions on its economy, the country has decided to launch a state-backed cryptocurrency.
In August, the government revealed that the draft for the implementation of the coin was ready. However, the central bank’s stance on cryptocurrency is not clearly defined since banks are presently banned from accepting or trading in crypto. The central bank is expected to release an official standpoint on the legality of cryptocurrencies soon. Interestingly, the current blanket ban on cryptocurrencies has not deterred Iranians from trading bitcoin. In May, $2.5 billion worth of crypto trade was linked to Iran.
Venezuela’s hyperinflation is a result of a combination of poor government’s policies and sanctions incurred by the nation. Since Bolivar’s value has critically dipped and the US dollar is difficult to access, citizens of Venezuela now depend heavily on bitcoin to get the most basic of supplies. The popularity of crypto in Venezuela has increased exponentially since 2014.
In order to curb the crisis, Venezuela launched a state-backed coin dubbed PETRO in February. The government revealed that the virtual money will be backed by its enormous oil reserve. Following the launch of the coin, US president Donald Trump banned the trading of the coin in the US. This inadvertently affected the global adoption of Petro. Reports suggest that Venezuelans have not been able to access Petro. On the other hand, bitcoin and other cryptocurrencies have continued to flourish in Venezuela.
Turkey’s economy hit a brick wall last year, which saw its currency’s inflation rate rise by 11.9%. The turmoil continued in 2018 as the inflation rate passed 15%. This resulted in the increase in cryptocurrency adoption in Turkey. In August, a report revealed that crypto exchanges in turkey had recorded more than 100% increase in crypto trading activities. However, the volumes do not compare with the aforementioned countries with more critical inflation rates.
Zimbabwe has experienced cash shortages for 2 years now. Therefore, it’s citizens increasingly use bitcoin for international payments. However, the adoption of cryptocurrency in Zimbabwe nosedived when the nation’s central bank stopped local banks from processing digital currency payments. A few days after the pronouncement, a high court in Zimbabwe lifted the ban.
Interestingly, a new report reveals that Zimbabwe’s new finance minister is an advocate for cryptocurrencies. The newly appointed minister Mthuli Ncube stated that cryptocurrency could be the solution to Zimbabwe’s crisis. In addition, Ncube revealed that he will ask the central bank to create a team that will do an extensive research on bitcoin and other cryptocurrencies.
To the citizens of these nations, bitcoin is key to survival, an escape from chaos, and a gateway to participate in the global economy. Their governments are scared that if this continues, they would lose control of the flow of money. However, these governments appear unwilling to go down without a fight. Hence, the implementation of a state-backed cryptocurrency.
Ifeanyi Egede is an experienced and versatile blockchain technology and cryptocurrency content writer and researcher with tons of published works both online and in the print media. He has helped several startup companies grow their businesses in the blockchain and cryptocurrency space. Ifeanyi has close to a decade of writing experience, and when he is not writing, he spends time with his lovely wife, Tega and adorable daughter, Chimamanda.