Crypto

Inflation destroys the economy; which country will be the next country to make bitcoin legal tender? – BeinCrypto France

Inflation and lack of access to financial services are the biggest problems for developing countries. Can Bitcoin solve these problems?

Latin America and Africa are among the regions hardest hit by inflation. Since the beginning of the year, the average monthly inflation rate has fluctuated around 11.22% in South America and 7.5% in Africa.

Bitcoin, the world’s first cryptocurrency, was born in 2008. Today, fourteen years later, its market capitalization is nearly $400 billion.

According to ButBitcoinWorldwide.com, there are 200 million bitcoin wallets and 53 million bitcoin users worldwide, including 400,000 daily users.

Example of El Salvador

In September 2021, El Salvador became the first country in Latin America to make bitcoin legal tender.

Before accepting bitcoin as legal tender, El Salvador went through a difficult period economically because, in addition to lack of financial inclusion, the country suffered from high inflation.

According to Trading Economics, the annual inflation rate in the country in September was 7.49%.

A year after Bitcoin became legal tender, the country is still trying to convince its citizens. According to statistics released by the El Salvador Chamber of Commerce as of early 2022, only 14% of the population use bitcoin.

Case of the Central African Republic

By decision of President Touadéra, the Central African Republic adopted bitcoin as legal tender in April last year.

The President of the country, in agreement with the Parliament, planned to launch a project called Sango, the first cryptohub in Africa.

According to Sango’s official website, the goal will be to “take Bitcoin to the next level and create the first crypto island.”

Which countries will be next to adopt bitcoin?

According to Triple A, Venezuela is considered one of the most cryptocurrency-friendly countries in Latin America. Indeed, more than 10.3%, or roughly 2.9 million Venezuelans, invest in cryptocurrencies.

In February 2018, the state-backed cryptocurrency Petro was launched in the country. Mainly used by the government, this cryptocurrency is backed by the country’s oil and mineral reserves.

According to Trading Economics, inflation in the Venezuelan economy in October was 1946%, which is the highest rate in Latin America.

Mexico is also on the list of countries that can make bitcoin legal tender. In March 2018, new technologies appeared in the country with a very developed regulatory framework. He is also supported by Mexican Senator Indira Kempis.

In Africa, Nigeria is among the countries most likely to accept bitcoin as legal tender. This is in part due to its economic position and the rate of adoption of cryptocurrencies by its citizens.

Similarly, the naira, Nigeria’s national currency, has depreciated by 209% in recent years. According to Trading Economics, the inflation rate in the country in September amounted to 20.77%.

Can Bitcoin solve the inflation problem?

As explained above, inflation is one of the biggest problems in economies around the world. However, Latin America and Africa are the biggest victims of hyperinflation.

Bitcoin brings a new decentralized monetary system without intermediaries. So can cryptocurrency solve inflation problems?

Inflation

The answer is yes, especially due to the characteristics of stablecoins like USDT, USDC, etc.

Unlike the traditional monetary system, which constantly emits money, Bitcoin’s deflationary economic system is limited to a maximum supply of 21 million coins.

Expert opinion

“Due to high inflation and a blatant lack of access to financial services, Latin America is one of the most difficult regions when it comes to macroeconomic issues. The world of cryptocurrencies offers many opportunities for citizens of certain countries of the continent,” explains Marcos Bravo Catalan, founder of Beps Global Consultants.

For her part, Maria Mercedes Etchegoyen, lawyer and founder of Cryptogirls, believes that “Bitcoin helps people all over the world by functioning as a new payment system. I think countries with high inflation, corrupt governments, and strict regulations are more likely to accept cryptocurrencies as legal tender.”

What is the future for cryptocurrency adoption?

It is unclear which countries will be next to make bitcoin legal tender. However, there are two economic factors that are common to countries that have adopted it: high inflation and lack of access to financial services.

Given what happened in El Salvador, it appears that education plays a key role in the adoption of Bitcoin or any other cryptocurrency. For adoption to be successful, people need to understand what cryptocurrencies are and, more importantly, how they work.

Denial of responsibility

All information on our website is published in good faith and for general informational purposes only. Any action taken by the reader based on information found on our website is done solely at his own risk.

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