Overprinting and Hyperinflation
Fiat money had been in use for many centuries, and had served us well for the same time frame. It’s light, convenient, and easy to use in comparison to copper, silver, and gold coins which are very heavy and inconvenient to use especially during large business transactions.
But despite the convenience brought to us by fiat money, it’s not the perfect currency. No, it's far from it…
By itself, fiat money has no intrinsic value. It only has value because the government determined it so. And unlike some popular belief, fiat money is neither backed by gold nor oil but by fate and trust to the government that issued it. Meaning, the more trustworthy the government, the more valuable fiat money becomes.
It was for this reason that the US Dollar was more valuable than most fiat money and why most fiat money is pegged to the US Dollar. It was also for the same reason why oil was always purchased in dollars. That's because for majority of other government in the world, the US government is trustworthy.
But to maintain the value of fiat money like the USD, the amount of physical money in circulation must be strictly controlled which mean the government couldn’t just print money whenever they wanted, or risk lowering the value of their country's currency.
But in some instances, the government would have no choice but to print more money. For example; the government would print more money if the economy is really bad or when the government needed money to pay its debt, or for some other reasons.
When that happened, the value of fiat money would go down which would then be followed by inflation, and in rare cases, hyperinflation.
What is hyperinflation?
Hyperinflation happened when prices of goods increased by an astonishing 1000%. To put hyperinflation more in perspective, here’s an example:
Let say for example, a cup of freshly brewed coffee in Starbucks cost about $2 in normal times. But if there’s a hyperinflation that $2 cup of coffee would cost about $2,000!
What cause hyperinflation?
Hyperinflation could occur because of socio-economic and political instability like for example if there’s war. When a country is unstable, the trust in the government dwindles greatly. And because of the lack of trust and the risk involved, companies from outside the country would ask for a premium for their goods, or products. Meaning, the prices of goods inside the country suffering from instability would also increase causing a massive inflation.
To combat the increase in prices of goods, the government of said country is often left with no choice but to print more money for their citizens so that they could buy the products with inflated prices – decreasing the value of their money even more and causing hyperinflation in the process.
Bitcoin Cash (BCH) Would Never Cause a Hyperinflation.
Overprinting is the downfall of most if not all fiat money. But such scenario will never happen to cryptocurrencies such as Bitcoin Cash (BCH). Why? Because…
Bitcoin Cash has limited supply of 21 million – Unlike fiat money that could be printed whenever the government wanted; Bitcoin Cash has a limited supply that could not be increased by simply printing. This limited supply would ensure that Bitcoin Cash would always remain valuable. Sure, Bitcoin Cash’s prices could go up or down depending on the market but it will never lose its value unless the entire community forsakes the project which I believe is almost impossible.
Bitcoin Cash is decentralized – One of the biggest issues with fiat money is the fact that it’s not decentralized, and relies on a centralized government that minted it. Being a centralized currency, fiat money would always be on the mercy of the government. Bitcoin Cash do not suffer this problem as the (Bitcoin Cash) community is the most powerful decision making body and not the government of any country. It also mean that every major change in Bitcoin Cash must first have the approval of the community.
Bitcoin Cash is a cryptocurrency – Bitcoin cash is a cryptocurrency, and unlike most fiat money, it could be used to purchase goods and services worldwide. Most fiat money on the other hand could only be used to purchase goods in their country of origin with the exception of the USD and Euro. If you want to use your country’s currency outside your own country then you need convert it first to either the USD or the local currency of that country. Bitcoin Cash will never face such a problem.
Bitcoin Cash is not “rooted” in one country – As I’ve mentioned earlier, the cause of hyperinflation is instability, and instability doesn’t always mean war. It could also because of an economic downturn, or anything that could destabilize a country’s government like a coup. If a country is suffering from any of the reason I’ve mentioned, it’ll face hyperinflation, causing the country’s currency to lose much of its value. But since Bitcoin Cash is a digital currency that exists on the internet, the instability of a certain country’s government will not affect it. On the contrary, it might even increase in value instead as people from said country would flock to cryptocurrencies for relief.
The reasons I stated above should give everyone a hint why I think cryptocurrencies like Bitcoin Cash is far superior to fiat money. It’s also the very same reasons why cryptocurrency would never cause hyperinflation or any type of inflation in that matter.
Certainly, cryptocurrencies also have its flaws too. For example it needed a device like a cellphone, or a computer, electricity, and an internet connection to be used. But in this day and age, almost everyone has a cellphone and access to the internet so I don’t really consider it a big problem. If there’s an issue that really needed addressing though, it would be volatility.
Speaking of volatility... it is what really keeping cryptocurrency from going mainstream. Although cryptocurrency was increasingly becoming more popular, volatility had always cause people to hesitate to invest in the market. So if we really want to see cryptocurrencies like Bitcoin Cash to become mainstream, we must quickly solve the issue of volatility.
Once we solve the problem of volatility, the weapons that detractors could use against cryptocurrency would be reduced by one, and our claim that cryptocurrency is superior to fiat currency will have more merit.
That’s all from me for today. Thank you for reading – have a nice day.
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My other articles: https://read.cash/@beastion
around 4 years ago we have bought per kg rice just by 0.35 cents but now almost 0.60 cents which mean go double and the reason is only about printing money issue .. One the other hand i seen a chart where cash value decrease from 1 usd to 6 cents but one usd investment on another sector increase upto 256 usd . So this is easy solution cash is totally bullshit!