"When a country’s domestic currency is unstable, subject to high rates of inflation or generally not trusted to hold its value, people may start to use a second currency they think will fare better — especially when it comes to buying imported goods."
If you've been on La Habana, Caracas, Cancún, New York or Amsterdam, you'll notice you can sustain your life without having a single unit of the local currency. Cubans are more than eager to accept dollars or clothes as a mean of exchange for other goods and services and my fellow Mexicans from turistic spots welcome any payment in US dollars. You also can go cashless and pay for your latte near Central Park with dogecoins, or even buy a house in Europe with bitcoin.
Historically, people have found ways for protecting their wealth betting on what they think worth the risk. That's the main reason why if you ask three different generations about what they consider valuable, you may as well end up with diverging ways of foreseeing the economic future. Furthermore, we live in an unique event were COVID-19 has put the majority of our population in alert mode. Thus, we've not seen inflation just because people are accumulating their wealth rather than consuming.
¿Where will they put their money before and after these times of crisis?
They will have to take in account that gold, land or even money are confiscatable.
Many of you may remember what the Executive Order 6102 is... if not, watch this video. In a nutshell, it was a presidential order from 1933 shortly after the great depression. Roosevelt's bold move meant that each person in a household could retain up to five troy gold ounces but the rest had to sold to the government for the current spot price ($20.67), just to find out a year later each ounce was now worth $35 US dollars.
Although at first glance it may look nothing of the above is connected, everything will make sense i in the upcoming posts. And to begin with, we'll review on the next post about India banning cryptocurrencies.
I´m actually am optimistic about mid-longterm Indian economy growth, but their short term solution to ban cryptocurrencies showcases the fragility of our centralized economic system and why just prohibitionist measurements just do not work; I also think that bitcoin trusters (Indian or not) will keep seeing value in DeFi. I
¿So what now?
Let me see what you think and I'll see you on part 1 about Indian current economic system and how it can impact the global cryptocurrency world.
