One of These 5 Hyperinflating Economies Could Adopt Bitcoin in 2017
Fourteen countries have inflation levels above 18 percent right now, 10 of which are rising at press time. Bitcoin prices and new user adoption have spiked several times in the past during economic turmoil such as banking bailouts and hyperinflation. Also read: Bitcoin 2016: the Year of a Different Rise Bitcoin as Safe-Haven Asset 2016 had […]
Fourteen countries have inflation levels above 18 percent right now, 10 of which are rising at press time. Bitcoin prices and new user adoption have spiked several times in the past during economic turmoil such as banking bailouts and hyperinflation.
Also read: Bitcoin 2016: the Year of a Different Rise
Bitcoin as Safe-Haven Asset
2016 had more than its share of global economic turmoil, but 2017 is also ramping up to be a major year of suffering at the hands of poor monetary decisions.
In March 2013, banks in the country of Cyprus gave a ‘haircut’ to their customers’ bank accounts, causing a public outrage. Bitcoin’s price subsequently jumped five-fold in a few weeks, possibly due to people seeking economic safe-havens as well as speculators.
Since then, several other economic blunders have caught the public’s eye, such as the Greece bailout, the Brexit vote, Venezuela’s crushing hyperinflation, and India’s demonetization. Each case was accompanied by a dramatic rise in bitcoin’s price as new investors chose to use the cryptocurrency as a safe-haven asset. Indeed, experts in mainstream news have already commented about bitcoin’s abilities to be a safe-haven asset like gold, or even a better one.
According to TradingEconomics, a service that compiles inflation rates, fourteen countries have inflation levels above 18 percent right now, 10 of which are rising at press time. Of those 10 countries, five are wealthy and technologically proficient enough for their citizens to use bitcoin as a safe-haven asset, should the current trends hold into 2017.
Venezuela’s money problems are still advancing. The country was showing a staggering 181 percent inflation rate per month at the end of last year, according to latest statistics by TradingEconomics. The service estimates the country’s inflation rate to stand at 410% in 12 months time. The International Monetary Fund (IMF) however predicts an inflation rate of 1,600% in 2017 for Venezuela. It “only” takes 50 percent inflation per month to be deemed hyperinflation, according to the World Bank.
To make matters worse, as soon as Venezuelans return from their holiday break, their 100 bolivar bill, their largest banknote, will become worthless as well in an attempt to combat money hoarding. 2017 is poised to be a painful year for Venezuelans.
Thankfully, the country already has a large and growing bitcoin community. The government also gives away free electricity so mining bitcoins there has been an excellent source of income for those who can get mining equipment. It may only be a matter of time before the conditions force enough Venezuelans into bitcoin before creating some sort of tipping point in 2017.
The tiny, Dutch-speaking republic of Suriname, a couple of countries to the east of Venezuela, is also having its own hyperinflation problems right now with a ruinous 77 percent inflation rate that is still rising. High levels of corruption have been blamed for the staggering economic hardship this is causing. Like their suffering neighbors to the west, the Surinamese are technologically ready for bitcoin today with an enormous 175 percent mobile phone penetration.
There does not appear to be a bitcoin community in the country yet, unfortunately. The nation is so small, however, that if one were to start up soon, there may still be time to spread bitcoin to a considerable portion of the half-million residents.
The South African republic of Angola is among the many African nations currently experiencing uncomfortable levels of inflation, recorded at 44 percent monthly last year when they were last published. Blessed with vast petroleum and mineral reserves, the seventh-largest country in Africa has become China’s largest supplier of oil and one of the world’s top-five sources of diamonds as well. Angolans also enjoy great mobile phone coverage and the quality of life there is far above most of their neighbors.
Today, bitcoin is relatively unheard of in Angola, but a small number of people are using Localbitcoins in the country.
Another South American country that has been flirting with hyperinflation for years is Argentina, which has passed 40 percent inflation rates this year for the first time in decades. The current situation in Argentina is shaping up like the last time hyperinflation destroyed the currency in 1990.
The heavily populated western African nation of Nigeria has a lot of good reasons to look at Bitcoin. TradingEconomics predicts they will graze 20 percent inflation in the first quarter of 2017, although growth seems to be slowing for now. More importantly, unlike nearby countries Kenya and Uganda, the trend of mobile money adoption through services like M-Pesa have skipped over Nigeria due to unfair laws that penalized telecom companies in favor of the local banks.
Nigerians have a 107 percent mobile adoption saturation with a huge population of 150 million subscribers, almost as large as the United States. A type of mobile money that the banks and politicians can’t stop, especially during such strong inflation, might really be able to make a difference for many Nigerians.
Do you think bitcoin adoption will rise in these countries? Let us know in the comments section below.
Images courtesy of Shutterstock, TradingEconomics, Fortune
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