There is a great story on CNBC published on Sep 22 about Venezuela turning to wire payments and bitcoin in order to transact. Here is the link: https://www.cnbc.com/video/2017/09/22/without-help-venezuela-cannot-pay-liabilites-daniel-osorio.html
This is a story of hyperinflation. Think Zimbabwe. Think Ukraine. Think Weimar Republic. This is when the currency devalues by more than 100% in a one year period. The government engages in irresponsible fiscal and monetary policy resulting in rapid devaluation of the government issued currency. Sound familiar?
Right now in the modern world, it can be argued that all countries' fiat currencies are in a race to the bottom. Over a short period of time, however, currencies like USD, Euro, and Yen may appear relatively stable when compared to weaker currencies, but they are all devaluing to an inevitable fate of being, well, worthless.
That is why we must constantly invest our money in order to hopefully get a return on that investment, and hopefully stay ahead of our nation's inflation rate. In essence, we are simply trying to maintain our purchasing power against this controlled devaluation.
In places like Venezuela, this attempt at controlled inflation has gotten out of control. The purchasing power of the citizens declines at a rate that money they earn and spend on goods buys less than half of the same number of goods a year later.
In places like this, it is better to spend your money immediately rather than save it. Additionally, trying to spend the money is difficult because you need carry around wheelbarrows of cash (figuratively speaking) to make even simple purchases.
Many hyperinflationary countries in the past have turned to the USD a more stable way to transact vs their local currency. Each physical bill was worth more than their local equivalent, and so one could carry more value with less physical burden. USD , however, is sometimes not available in enough liquid supply in certain parts of the world, and as we know, even USD itself is constantly devaluing.
Enter Bitcoin. Bitcoin is a deflationary currency due to it's fixed ultimate supply of 21 million bitcoin and known supply curve. Bitcoin can be lost (from forgotten private keys, etc.) and not gained therefore total supply can only go down. Bitcoin is liquid due to the ability to transact worldwide and be divisible up to 8 decimal places (the smallest unit called a 'satoshi'.) Bitcoin is physically transportable regardless of transaction size due to its electronic nature. Best of all, bitcoin cannot be corrupted by irresponsible governments, since it is governed only by math and its ledger and mining systems are decentralized throughout the world (and this last feature is true only for Bitcoin and no other cryptocurrency.)
Citizens of countries like Venezuela that are hyperinflationary are thus now skipping the US Dollar entirely and going straight to Bitcoin to store their hard earned value and to transact business. We are witnessing the transformation of sovereign nation-states into a Bitcoin economy before our very eyes.
All this bodes very well for the future price and sustainability of Bitcoin. Cheers.
- Kalienx777
