Binance, the world’s largest exchange, tells us how cryptocurrencies can help us preserve the loss of purchasing power, caused by inflation, especially in Latin American countries.
There are countries in Latin America where inflation punishes very hard, as in the case of Argentina, where it is already close to 45% year-on-year. Another case is that of Venezuela, where the figure is exorbitant. Your currency is literally worthless.
Cryptocurrencies, especially Bitcoin, can be an interesting alternative to preserve the value of our savings.
Cryptocurrencies as a savings alternative
Cryptocurrencies have been mainly used to make investments, that is, people spend a certain amount on an asset and expect to increase profits after a certain period of time, but have you ever thought about cryptocurrencies as a method of saving against inflation ?
Inflation is the economic process caused by the imbalance between production and demand. It causes a continued rise in the prices of most products and services, and a loss of money value to be able to acquire them or make use of them.
Leaving savings at home under the mattress, locked up, or in a safe is not the way to protect savings, as money will be losing value every day due to factors such as inflation.
Similarly, keeping money in a savings account at a bank is also not an option, capital saved over years will have less and less purchasing power because in inflation countries the fiat currency loses value every day.
When a currency loses value, people take refuge in stronger or more stable foreign currencies like the US dollar or the euro. The traditional way to do this is to buy them in cash and store them in a safe place.
Buy and sell foreign currency in cash, not the best solution, since it generates some inconveniences both in security and transaction cost due to the difference between the purchase and sale prices.
On the other hand, it must be taken into account that all fiat currency however strong or stable it is, it is subject to a central government or entity, which resort to the injection of capital to cope with economic crises.
Crypto can prevent the devaluation of your savings
If you live in a country that is experiencing an economic crisis and the value of the fiat currency is falling rapidly. One of the best options out there to safeguard your savings are cryptocurrencies.
Bitcoin is a volatile cryptocurrency but it will never suffer from inflation, since being decentralized and based on blockchain technologyIt does not depend on an economic authority that prints money to survive during an economic crisis. The same happens with the rest of cryptocurrencies.
One of the most outstanding characteristics of Bitcoin is that the maximum number of coins that can be created is limited. As of today, there are about 18,401 million Bitcoins in circulation and only 21 million can be created. However, this amount is not entirely accurate, it is a rounded figure.
Many Venezuelans have seen the solution to hyperinflation in cryptocurrencies in their country, most have all their savings in different cryptocurrencies and only withdraw small amounts when they need them to make a purchase. In this way, they prevent your capital from losing value every day due to inflation.
Buy and sell cryptocurrencies with your local currency in Binance P2P
One of the most cutting-edge platforms to buy and sell Bitcoin and other cryptocurrencies like ETH, BNB, EOS, BUSD, and USDT is Binance P2P. Here you can buy any of the cryptocurrencies mentioned above with the currency of your country and without paying commissions.
From launch in October 2019, has incorporated a wide variety of fiat currencies, among which are the Brazilian real, the Argentine peso, the Mexican peso, the Colombian peso, the Peruvian sol, the Venezuelan bolívar and many other currencies worldwide such as the US dollar or the euro.
Undoubtedly the main advantage of Binance P2P, is that you can buy cryptocurrencies directly with your fiat currency, without having to resort to hard currencies such as the dollar.
The information in this content has been extracted from reliable sources detailed below:
* Some of the content was taken from the Binance Blog.
* CoinMarketCap cryptocurrency market capitalization graph.