Cryptocurrencies Protecting Us From The US Government?!
What does quantitative easing even mean? It is a monetary policy, where the government is printing more money into the system hoping that it will encourage the people to spend more and “kickstart” the economy. Besides that, even the interest rates go down to encourage lending and investing.
This can happen because of the Federal Open Market Committee, which makes key decisions about interest rates and the growth of the US. They decide that banks can hold less in reserve and that allows them to lend more money and even lower the interest rates.
Because the government used quantitative easing and printed $3 BILLION or 1⁄5 of all US dollars ever created we fear that deflation is going to happen soon.
I believe that is the reason for the whole cryptocurrency market being bullish. Fear of deflation means holding the US dollar is a risky “investment”. On the other hand, cryptocurrencies are seen as a store of value. Meaning they don’t deflate but rather serve as gold in maintaining its value.
But not all cryptocurrencies are the same. Bitcoin on one side has a limited supply and Ethereum on the other side has an unlimited supply but both hedge against inflation. Bitcoin is able to do that because of a limited supply which is not going to change, no matter the price or demand for it. Ethereum does it by lowering the reward for mining and relies on demand being greater than the supply.
Before cryptocurrency was seen as a store of value it was treated as an investment (despite that it doesn’t produce any cash flow or interests) and was very speculative. That is why only now when the transition happened companies like Tesla have Bitcoin in their portfolio.
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