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Cryptocurrencies Protecting Us From The US Government?!

Written by: Žiga Kališnik, 29. 4. 2021
Cryptocurrency can save us from the government and their use of quantitative easing that is going on during Covid-19. It is predicted that it is going to affect 100% of the US.

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.

Correlation between Bitcoin and USD debt

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.

Elon Mush adds #Bitcoin to Twitter account
I believe that cryptocurrency is the future and one day it will be so widespread that it could replace fiat currency. That’s far in the future before that all the countries will have to regulate it in one way or another. We already have tools to track the wallet and all of the currencies that went through. We can even see where the coin came from meaning we can trace “blood coins”.

About the author:

Žiga Kališnik

 

Soon to be 22-year old Slovenian management student. I have been studying personal finances and cryptocurrency for quite some time now.
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