{"id":3305,"date":"2022-04-11T18:37:56","date_gmt":"2022-04-11T18:37:56","guid":{"rendered":"http:\/\/cryptoheretostay.com\/?p=3305"},"modified":"2022-04-11T18:37:56","modified_gmt":"2022-04-11T18:37:56","slug":"crypto-seen-as-the-future-of-money-in-inflation-mired-countries","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=3305","title":{"rendered":"Crypto seen as the \u2018future of money\u2019 in inflation-mired countries"},"content":{"rendered":"<script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script>\n<p>Last year, cryptocurrencies reached a \u201ctipping point,\u201d according to Gemini\u2019s 2022 Global State of Crypto report, \u201cevolving from what many considered a niche investment into an established asset class.\u201d\u00a0<\/p>\n<p>According to the report, 41% of crypto owners surveyed globally purchased crypto for the first time in 2021, including more than half of crypto owners in Brazil at 51%, Hong Kong at 51% and India at 54%.<\/p>\n<p>The study, based on a survey of 30,000 adults in 20 countries over six continents, also made a strong case that inflation and currency devaluation are powerful drivers of crypto adoption, especially in emerging market (EM) countries:<\/p>\n<p>\u201cRespondents in countries that have experienced 50% or more devaluation of their currency against the USD over the last 10 years were more than 5 times as likely to say they plan to purchase crypto in the coming year than those in countries that have experienced less than 50% currency devaluation.\u201d<\/p>\n<p>Brazil\u2019s currency, the real, experienced a 218% devaluation \u2014 suggesting high inflation \u2014 against the United States dollar between 2011 and 2021, and 45% of Brazilians surveyed by Gemini said they planned to purchase crypto in the coming year.\u00a0<\/p>\n<p>South Africa\u2019s currency, the rand, recorded a 103% devaluation in the past decade \u2014 second only to Brazil among the 20 countries in the survey \u2014 and 32% of South Africans are expected to be crypto owners in the next year. The third and fourth highest devaluation, or inflationary, countries, Mexico and India, displayed a similar pattern.<\/p>\n<p>By comparison, the currencies of Hong Kong and the United Kingdom experienced no devaluation at all against the U.S. dollar over the past 10 years. Meanwhile, relatively few surveyed in those countries, 5% and 8%, respectively, professed an interest in purchasing crypto.\u00a0<\/p>\n<p>What conclusions can be drawn from this? Noah Perlman, chief operating officer at Gemini, sees different crypto use cases, often depending upon where one lives. He told Cointelegraph:<\/p>\n<p>\u201cIn countries where the local currency has been devalued against the dollar, crypto is viewed as a \u2018need to have\u2019 investment, whereas in the developed world it is still largely seen as \u2018nice to have.\u2019\u201d\u00a0Source: Gemini<\/p>\n<h2>Crypto as currency replacement\u00a0<\/h2>\n<p>Winston Ma, former managing director and head of North America at China Investment Corporation and now adjunct professor at New York University School of Law, makes a key distinction between an asset that works as an inflation hedge and one that is used as a currency replacement.<\/p>\n<p>Cryptocurrencies like Bitcoin (BTC) have yet to achieve \u201cinflation hedge\u201d status, unlike gold, in his view. In 2022, they have behaved more like growth stocks. \u201cBitcoin correlated more tightly to the S&amp;P 500 index \u2014 and Ether to NASDAQ \u2014 than gold, which is traditionally viewed as an inflation-hedge asset,\u201d he told Cointelegraph. But, things are different in parts of the developing world:<\/p>\n<p>\u201cIn the emerging markets like Brazil, India and Mexico that are struggling with inflation, inflation may be a primary driver of cryptocurrencies\u2019 adoption as a \u2018currency replacement.\u2019\u201d<\/p>\n<p>\u201cThere\u2019s no denying that in early days and still now adoption has been driven by countries where currency stability and\/or access to proper banking services has been an issue,\u201d Justin d&#8217;Anethan, institutional sales director at the Amber Group \u2014 a Singapore-based digital asset firm \u2014 told Cointelegraph. Simply put, developing countries are more interested in alternatives to easily debased fiat currencies, he said, adding:<\/p>\n<p>\u201cOn a USD notional basis, the larger flows might still come from institutions and more developed countries, but the growing number of actual users will probably come from places like Lebanon, Turkey, Venezuela and Indonesia, among others.\u201d<\/p>\n<p>Sean Stein Smith, assistant professor in the department of economics and business at Lehman College, told Cointelegraph that he was not particularly surprised by the survey\u2019s findings, \u201csince inflation is one of the factors that has and continues to drive adoption of Bitcoin and other crypto assets all over the world.\u201d<\/p>\n<p>But, it remains just one of many factors, and often different regions have separate factors that push adoption, said Stein Smith. \u201cOn a fundamental level, investors and entrepreneurs are increasingly recognizing the benefits of crypto assets\u201d as an \u201cinstantaneously accessible,\u201d traceable and cost-effective transaction option. In other places, \u201cthe potential capital gains and returns of crypto assets\u201d encourage crypto adoption.<\/p>\n<p>There are regulatory questions surrounding cryptocurrencies globally, particularly in the Asia Pacific and Latin America regions where 39% and 37% of survey respondents, respectively, said that \u201clegal uncertainty around cryptocurrency,\u201d tax questions and a general education deficit could affect adoption, the report noted. In Africa, for example, 56% of respondents said more educational resources to explain cryptocurrencies were needed.<\/p>\n<p>\u201cIt is not only inflation, it is a bigger issue of empowering our youth to have a better life than their parents and not to have fear of failure or allegiance to the legacy financial markets or products,\u201d Monica Singer, South Africa lead at ConsenSys, told Cointelegraph. In addition, \u201cthe issue of dependency on cash and remittances is huge in Africa and the dependency on social grants.\u201d<\/p>\n<h2>The future of money?<\/h2>\n<p>Overall, Brazil and Indonesia were the top two countries in cryptocurrency ownership in the survey. Forty-one percent of those surveyed in each of those countries said they owned crypto. Comparatively speaking, only 20% of Americans surveyed said they owned cryptocurrency.\u00a0<\/p>\n<p>People living in inflation-afflicted markets are more likely to view cryptocurrencies as the future of money. According to the survey:<\/p>\n<p>\u201cThe majority of respondents in Latin America (59%) and Africa (58%), where many have experienced long-term hyperinflation, say that crypto is the future of money.\u201d<\/p>\n<p>The strongest support for this view was seen in Brazil at 66%, Nigeria at 63%, Indonesia at 61% and South Africa at 57%. The fewest believers were in Europe and Australia, notably Denmark at 12%, Norway at 15% and Australia at 17%.<\/p>\n<h2>Will the Ukraine conflict impact adoption?<\/h2>\n<p>The survey was conducted before the Ukraine-Russia War. Will that devastating conflict have any long-term impact on global crypto adoption growth?<\/p>\n<p>\u201cThe Ukraine-Russia war has certainly led to crypto being thrust directly into the mainstream conversation,\u201d said Stein Smith, \u201cespecially since the Ukrainian government has directly solicited over $100 million in crypto donations since the war began,\u201d further adding:<\/p>\n<p>\u201cThis real-world demonstration of the power of decentralized money has the potential to turbocharge wider adoption, broader policy debate and increased utilization of crypto as a medium of exchange moving forward.\u201d\u00a0<\/p>\n<p>But, the war may not affect all parts of the developing world. \u201cThe war in Ukraine is of no consequence to the demand for crypto in Africa,\u201d Singer told Cointelegraph. Other factors loom larger. \u201cInflation, yes, but also the lack of trust in the government in many countries in Africa and the fact that we have a young demographic that is very knowledgeable in using mobile phones and the internet.\u201d<\/p>\n<p>The success of Mpesa in Kenya, for example, has had a big impact on the continent and will arguably help hasten further crypto adoption. It \u201cis directly related to the spirit that exists in Africa of making a plan when everyone that you trust fails you,\u201d she said.\u00a0<\/p>\n<p>On the other hand, Ma views the Ukraine conflict as a sort of crisis check for cryptocurrencies. \u201cThe Ukraine-Russia War has served as a stress test for the payment rail of cryptocurrencies amid global uncertainty, especially for the residents in emerging markets,\u201d he told Cointelegraph, adding:<\/p>\n<p>\u201cWe could expect the greatest future gains in crypto adoption to be found in emerging markets like these.\u201d<\/p>\n<p>Inflation along with currency devaluation are enduring concerns in many parts of the world. In such afflicted areas, Bitcoin and other crypto are now seen as candidates for currency replacement \u2014 the \u201cfuture of money.\u201d This is generally not the case in the developed world, though that could change, particularly with more regulatory clarity and education. As d&#8217;Anethan told Cointelegraph, \u201cIt seems that even Western nations are waking up to inflation and the impact it will have on cash holdings.\u201d\u00a0<\/p>\n<p><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/cointelegraph.com\/news\/crypto-seen-as-the-future-of-money-in-inflation-mired-countries\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last year, cryptocurrencies reached a \u201ctipping point,\u201d according to Gemini\u2019s 2022 Global State of Crypto report, \u201cevolving from what many considered a niche investment into an established asset class.\u201d\u00a0 According to the report, 41% of crypto owners surveyed globally purchased crypto for the first time in 2021, including more than half of crypto owners in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3306,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[2],"tags":[],"class_list":["post-3305","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bitcoin-news"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/3305","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3305"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/3305\/revisions"}],"predecessor-version":[{"id":3307,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/3305\/revisions\/3307"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/3306"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}