The term Hyperbitcoinization was conceived a few years back. The concept is that we’ll all be making use of virtual currencies in the near future, instead of the traditional banking systems we all know so well.
There are signs this tech ambition could be closer than we thought, with an increasing number of mainstream industries and companies embracing it all. In fact, an example of this is established platform City Index who offer services like CFD trading and spread betting; having crypto trading as well. However, in terms of countries, it is not just in the first world powerhouses (for example China and US) that blockchain is forging ahead; places such as Zimbabwe and Iran are seeing continual decreases in their currency values, which provides the perfect opportunity for Hyperbitcoinization.
There are many variables as to why these states are experiencing such financial hardship, among them sanctions and poor governance, but it has not stopped people in countries such as these to continue looking for ways of storing or creating wealth. Recently other platforms have also released an article looking at how certain populations are buying up Bitcoin in an attempt to retain their currency’s value while it keeps depreciating.
Turning to Bitcoin
Turkey might not be the worst performing currency in the world today but has recently slipped into a financial crisis. This coincided with a 131.9 percent increase in people buying Bitcoin between July and August this year. This equated to 759,026 Turkish liras up from 327,295. Turkey now has a higher rate of cryptocurrency ownership than the United States, United Kingdom, France, Australia and Germany just to name a few, with 18% of Turks owning Bitcoin.
Zimbabwe’s recent history is one of great sadness. From being one of Africa’s crown jewels as recently as 2001 the country has descended into financial chaos under then President Robert Mugabe, famously producing a 1 trillion Zimbabwean dollar note. Money shortages have led government officials to limit the amount of money Zimbabweans are allowed to withdraw from ATM’s, a move which saw the price of Bitcoin doubling in the region as people tried to avert financial restrictions.
Countries Getting Involved
It’s not only the disgruntled civilians that are turning to Bitcoin as a means to preserve funds, but countries themselves are now also looking into starting state-run cryptocurrencies.
Iran, recently ditched by US in the nuclear agreement, has seen levels of inflation rise rapidly over the last few months. Having witnessed the boom in Bitcoin buying among its own people, the Iranian government announced plans to launch its own state-run cryptocurrency.
This is not new, however, as the financial situation in Venezuela has already seen a state-run cryptocurrency come into fruition. The South American country has made it extremely difficult to buy American dollars, and although people are still investing in gold the ownership of Bitcoins continues to rise. This is a result of hyperinflation, the likes of which has crippled the oil-rich country financially. The state-run cryptocurrency, the Petro, is attempting to make inroads to a market that is Bitcoin dominated.
Where To Next?
While there definitely are signs of Hyperbitcoinization as a means to store value in currencies that are falling through the floor, we still seem to be many years away from entire countries operating on this structure. This is because foreign economies such as the US dollar and natural resources such as gold still present viable options for investing money. While spikes in inflation and hard financial times are leading countries and their occupants to invest heavily in crypto, it is too infrequent right now.
However, one can’t ignore the shift towards populations looking for virtual ways to store value, whether it be through forex trading, spread betting or, evidently most popular, Bitcoin trading. So it can be argued that if the current trends continue that we will eventually see a major shift towards Hyperbitcoinization.
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