Bitcoin is now 12 years old, and there are many things that it has celebrated in 2021. Along with the all-time high prices of US$69,000, it has also got institutions' arrival. There was also a new iconic Los Angeles stadium that got the name crypto.com arena. These things point to the fact that Bitcoin has been a successful venture over the years, leading a very glamorous life. Nowadays, it has become widespread and is woven into the fabric of our daily lives. According to some analysts of cryptocurrencies, Bitcoin can be a very well-developed method of addressing controversies related to inflation and the global issue of poverty. However, this all can lead us to leave a better lifestyle in the coming future potentially.
One of the most important reasons Bitcoin creation cannot always remain in power is its inflation resistance. Yes, the creators of bitcoin made it resistant to inflation because of the limit of supply. The supply of bitcoin is completely limited not because any government entity controls it but because of the diminishing rate of return. Therefore, the miners do not get the same reward by creating another cryptocurrency. Whenever a cryptocurrency mining firm gets one Bitcoin, getting another one becomes even more challenging. Due to this, the cost incurred in mining another Bitcoin increases. Hence, the profit decreases. This mechanism is known as halving, and it reduces the reward for the mining process. Especially, as you get closer to the last bitcoin.
Bitcoin poses a tough competition to the United States dollar because of its money supply. The monetary supply of bitcoins has decreased ten times since the recession of 2008. Also, Congress is looking to initiate the build-back better bill. This may also add $1.5 trillion to the exceeding balance sheet of the Federal Reserve. It is going to be a comparison for the fixed supply of bitcoins which is 21 million. According to the recent consumer price index on profit-maximizer.app, inflation was recorded at 6.5% in the United States of America. The reason behind such a high rate of inflation is speculative. Many believe it to be due to potential mismanagement of the currency. However, it is also controlled by politicians. The government produces more money when they need it, however this is not the solution to reducing inflation.
A similar financial situation occurred in 1929, and led to the economic collapse of the German republic. It was due to hyperinflation. Back in time, a wheelbarrow carrying a full load of cash had more value than the actual cash it carried. Hence, hyperinflation is one of the most drastic situations in which the United States can go. But, with the help of cryptocurrencies, it can right the situation. It could be straightforward for government officials to deal with such a crisis if it occurs, provided it looks at the opportunities that the cryptocurrencies are providing. If we look at the bigger picture, bitcoin cannot only resist inflation but can do many other things as well.
Bitcoin could be considered the biggest weapon against the property from which the world is suffering nowadays. Recently, El Salvador, one of the two poorest countries globally in per capita income, began to accept Bitcoin as a legal tender. El Salvador is the first country in the world to accept Bitcoin as its reserve currency in September. So far, the indicators also show that it moving in the right direction.
After one month of accepting Bitcoins as a legal tender, there are cryptocurrency wallets than any other type of wallet in their pockets. According to the data, these figures project that the total number of people with Bitcoin wallets can construct 20 Bitcoin schools. Also, the country is looking to use volcanic power as a geothermal power creation source for cryptocurrency mining. Another country, Zimbabwe, is also looking to accept Bitcoin as a legal tender. According to the data, half of the citizens of Zimbabwe are living under the poverty line. Hence, for Americans, Bitcoin can prove a chance to protect themselves from the increasing rates of products and services. Also, Bitcoin can offer a second chance for the people living in the world's poorest countries to have a better standard of living.