How to keep your savings safe when the world economy is following down with high speed
The current state of affairs in the global economy makes you think about the safety of your savings, as well as look for new ways to increase your wealth. All world economies are in a stage of deep inflation. The same goes for cryptocurrencies. And here the question arises: can crypto and inflation somehow affect your crypto assets? Will bitcoin cope with the current inflation? And how, in general, inflationary cryptocurrency is to affect our savings. Can inflationary cryptocurrency be when the number of their tokens is continuously rising? Can cryptocurrency be the subject to inflation when mining or staking?
Let’s look at what we can expect in the future in the classical and cryptocurrency markets.
The economies of some Latin American countries and some Asian countries sank by almost 50%. The more powerful economies of North America and European countries sank by 15-20%. Let’s take a look at what inflation means for the average customer.
What is inflation
In simple words, inflation means the depreciation of a currency such as the Euro or Pound, which occurs over time, in relation to consumer commodities. Most expert economists believe that a certain level of inflation allows the economy to grow and encourages the average customer to shop and increase the consumption of goods and food. Due to inflation, the price of all goods rises. For example, something that cost 1,000 euros 20 years ago can now cost 1,500 euros. This is the inflation of the national currency in relation to the product.
In the same way, inflation can affect the cryptocurrency market. But most experts are sure that now crypto inflation is much less than the inflation of national currencies.
Will inflation affect cryptocurrency? The answer is that inflation affects cryptocurrencies much less than conventional fiat currencies. Inflation is also important for cryptocurrencies because Euro that you have in your savings accounts loses its valuation over months and years. In this variant, bitcoin and other top cryptocurrencies, like Ethereum, are an excellent alternative. Bitcoin has unique properties compared to paper money that allows it to be less prone to inflation.
Here’s what keeps crypto inflation in check:
1) Bitcoin cannot be affected by the government for its own benefit. For example, with conventional currency, the government can print more paper money to achieve its goals.
2) Bitcoin is similar to gold because it is limited in mining and due to this bitcoin will only grow over time.
3) The number of bitcoins that can be mined is 21 million bitcoins, and 19 million bitcoins have already been mined. Thanks to this, no one can print/code or somehow increase the number of bitcoins, which makes it look like gold and allows it to be predictable in economic terms. This is exactly what will make the cost of bitcoin quite predictable.
Will inflation affect bitcoin? The answer is yes, but since the number of bitcoins mined decreases by 50% every 4 years, bitcoin inflation is expected to groan lower and more predictable. Due to this, the cost of bitcoin in relation to the dollar, for example, will gradually increase.
But not all crypto inflation will be the same as Bitcoin. For example, take stablecoins, a huge number of these kinds of crypto are pegged to the value of fiat money and have the same volatility as fiat money.
Bitcoin and inflation
Why bitcoin fans fear inflation is? Bitcoin, as the top cryptocurrency, is also subject to inflation, which is what its fans fear. But as mentioned above, there is an exact limit to the bitcoins. These are the disinflationary measures that will eventually slow down bitcoin inflation. The main measure is “halving”, which is a condition for reducing the mining of bitcoins every 4 years.
At the moment, bitcoin has lost almost 50% of its peak value, and many are wondering will bitcoin keep rising? Bitcoin is inherently a deflationary active, that’s why people of countries with poor economies are using this asset to hedge against hyperinflation and the everyday rising of goods and services prices. Unlike fiat money, cryptocurrency is not under control by the government to change banking rates and increase the number of paper money. Most importantly, the supply of Bitcoin will never exceed 21 million. It allows keeping your wealth active and against inflation. All this indicates that bitcoin will keep rising. Bitcoin is predicted to grow within a couple of years to a value of 100,000 USD per 1 bitcoin.
Is inflation good for crypto? In most cases, yes, because more and more people from countries where currencies are not stable choose bitcoin as a store of their assets. Bitcoin, Ethereum, and other top cryptocurrencies can show periods of huge growth in their value in relation to fiat money. This is exactly what happens at the moment when the inflation of fiat money reaches its peak. Cryptocurrency, and in particular bitcoin, is excellent insurance against inflation. That is, when inflation grows up, the value of money goes down in value. To solve this kind of problem, many people invest in assets that will almost certainly rise in value faster than inflation. This strategy provides confidence that the net worth of their investment remains positive even as inflation eats into the value of their savings. Therefore, the answer is unequivocal, it is worth investing part of your funds in crypto assets.
Overcome inflation with Simple
There are numerous exchanges and brokers on the market, but for a young investor, there is a risk of making a mistake in choosing a quality platform. If you want to start investing in crypto, then we recommend Simple App, which will allow you not only to buy cryptocurrency but also earn crypto with the Simple Earns program. For example, on stablecoins that are always equal to $1, you can receive up to 15% APY on USDT. This means that, for example, if the currency inflation is 5% per year, then you will multiply your savings by 10% APY guaranteed.
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