News Hyperinflation Hits Zimbabwe and Turkey, Strengthening Cryptocurrency Use Cases

Hyperinflation Hits Zimbabwe and Turkey, Strengthening Cryptocurrency Use Cases


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Zimbabwe has had a recent history of severe hyperinflation, demonstrating the importance of money independence from the government and recent events in Turkey show risks of more economic destruction by governments.

In mid-2015, one hundred trillion Zimbabwean dollars were only worth 40 U.S cents, which was caused by poor economic policies by the government. One startup, Zimbocash, is attempting a solution with cryptocurrencies by distributing the money to Zimbabweans, for free, without destroying the economic incentives to dump the currency or to assign a low value to the currency.

Then in Turkey, their government has caused massive distortions in their financial markets by attempting to prevent devaluation of their currency. With economic conditions worsening in the country, the government has been pressed to maintain decent financial conditions prior to an election by making it virtually impossible for foreign agents to short the lira. They also pressured banks to not provide liquidity to foreign parties that want to bet against the lira, which further shot up borrowing costs and thus forced individuals to sell other Turkish assets to gain liquidity to bet against the country’s concurrency and balance their risk.

Providing an alternative to government control

Both of the above events illustrate how governments can often have interests unaligned with their citizens and thus will not be providing them the best possible money supply. Turkey is a prime example of how any government can destroy an economy since it has repeatedly fluctuated between a relatively successful economic country and a country with rapid inflation, but Zimbabwe illustrates the extremes that can occur if policies are not checked. Cryptocurrency aims to be that additional check by giving consumers another option.

Dash holds a long-established presence in Africa, particularly in Nigeria, and previously made overtures to Zimbabwe directly with the Kuvacash project.

Cryptographically-sound money as a solution to hyperinflation

The problem with acute loss of currency value through hyperinflation may be countered by using sound money with hard limited supplies. Bitcoin rose to global attention through its cryptographically-limited of 21 million eventual coins, including regular decreases on the coin’s inflation as this eventual hard limit approaches. However, several in the Bitcoin community, including former Bitcoin Core developer Peter Todd, have advocated for infinite inflation, eliminating the limited on the maximum coin supply in order to fund mining, and therefore network security, through unlimited inflation. Dash maintains a maximum coin supply of up to 19 million depending on various factors such as monthly treasury payout amounts, and has no plans to raise this limit.

This post was originally published on DashNews. Bitnewsbot curates, examines, and summarizes news from external services while producing its own original material. Copyrights from external sources will be credited as they pertain to their corresponding owners.


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