Crypto Adoption in 2020

“Have you ever heard of Greece economic crisis? “

 Crypto Adoption in 2020

Have you ever heard of Greece economic crisis? Have you ever seen how do people react when their country currency falls? What could they do to preserve their purchasing power? Do you know how economic crises and hyperinflation could affect the price of cryptocurrencies?

Let’s have a direct question: in which country the Bitcoin or an altcoin would adopt first? Experts believe that nations suffering from hyperinflation or in which local currencies are weak would adopt cryptos like the Bitcoin earlier.

In the midst of economic crisis in a country, some people tended to change their money into Bitcoin as a store of value to save their purchasing power. Now in some countries suffering from economic crisis or high inflation, people are trying to use cryptocurrencies to purchase daily needs. It is not far that people forget local currencies and use cryptocurrencies instead of.

To save their monetary assets value, people usually minimize their holdings in local currency switching to more stable stores of value such as foreign currencies, commodities, real estate, and so on. After a while, they must exchange the sum or part of their stores of value for local currency to meet their requirements from local markets.

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They suppose to pay exchanges an amount of money, they need a mediator and they likely oblige to pay extra tax. Preventing these complicated processes, some sellers and buyers in countries with weak local currency prefer to deal by cryptocurrencies like Bitcoin.

During the Greece economic crisis Greeks bought Bitcoin to preserve their wealth, now in Venezuela and Argentina where people are experiencing high inflation, some Venezuelan and Argentineans not only save the value of their monetary assets but also use Bitcoin for their daily needs.

Crypto adoption and How Greek Debt Crisis Affected the Price of BTC

Greek crisis started in late 2009 in the aftermath of the financial crisis of 2007–08. Greek economy structural weaknesses and lack of monetary policy flexibility as a member of the Eurozone posed a lot of financial problems for the country. In 2015 Greek debt levels had reached €323 billion, and the risk of a Grexit was probable. Greek officials had to accept reforms suggested by the EU.

The main concern of the Greeks at this point was wealth preservation. Greeks were losing their purchasing power, and they should save their monetary assets. They were looking to turn physical cash into stores of value, for example, investing in jewelry, gold, and so on.

But it is difficult to trade for goods and services by these stores of value being purchased by Greeks. It is not common to pay jewelry for your groceries.

The security of their stores of value was another problem. Jewelry could be stolen or confiscated. Then what the Greek really need was a store of value that could be purchased with cash would be safe and had similar features to money. Bitcoin met these requirements.

investing in bitcoin

Data in 2015 (below chart) showed that a notable growth in BTC trading activity from Eurozone countries during the climax of the debt crisis. On that time, Bitcoin was accepted as a viable store of value. The increasing demands for BTC affected on BTC price and mounted it.

 

 Country

 % Change in Activity

 Greece

 50.00%

 Ireland

 36.36%

 Portugal

 73.47%

 Spain

 10.24%

Crypto adoption – Argentinean paid $2000 Extra for Bitcoin 

Argentina suffers from rampant inflation. Annual inflation has more than doubled from around 25 % in 2015 to 54.5 % over the past 12 months. Now, Argentina’s 12-month inflation is running at 54.4%, according to the national statistics agency. Argentina’s peso lost 18% of its value in a week in Aug.When people lose faith in a currency, the normal response is to begin to use another currency, typically a stable one such as the U.S. dollar.

Recently President Mauricio Macri announced he would reinstate restrictions on foreign currency purchases. The controls prohibit Argentineans from purchasing more than $10,000 U.S. dollars per month without permission from the central bank, the Washington Post reported.

In this situation, Argentineans swarmed the Bitcoin market. In Sept. after the announcement of President Macri the Bitcoin price exploded in Argentina. It price increased from $10,750 to $12,750.

It seems Argentinean find Bitcoin more advantageous than old-fashioned cash, likely because a central authority like the central bank doesn’t control it and because Bitcoin can be easier to obtain than other fiat currencies. For example, it can be bought and sold via Bitcoin exchanges online as well as through indirect transactions by means of some websites.

 

The Curious Case of Venezuela

Venezuela is a special case between states which suffer from an economic crisis. Tragic economic policies, political problems, and U.S. sanctions caused the country’s economy disastrous. The country has experienced runaway hyperinflation reaching a million percent in 2018. In April 2019, the International Monetary Fund estimated that inflation would reach 10,000,000% by the end of 2019.

The value of the national currency, Bolivar, has crashed. A cup of coffee cost one million Bolivar in 2018. Venezuelan citizens have resorted to alternative stores of value. They have tended to cryptocurrencies, especially the Bitcoin. Its trading volumes continue to grow at a rapid pace In Venezuela. Just during one week in September, they spend 120 billion Bolivar on purchasing Bitcoin.

It claims that the cryptocurrency is to be inflation-free and also offers an opportunity for earnings in a country with a troubled economy. Now, cryptocurrencies are popular in the country. Taking advantage of the country’s low electricity rates, Venezuelans also have become among the world’s most prolific miners of cryptocurrencies. Cryptocurrencies are such popular in Venezuela that the country even launched a national cryptocurrency, the Petro.

On the other hand, Nicolas Maduro’s stubborn government has prevented the entering of humanitarian aids to the country. Recently a non-profit organization Bitcoin for Venezuela Initiative (BFVI) is facilitating the assistance. Through Bitcoin, it enables worldwide contributions in order to stop starvation in many families. It supports thousands of hungry residents of the country.

Crypto adoption example – Shop in France via Bitcoin

Crypto experts have expected that crypto adoption would take place in countries suffering from economic crisis, such as Venezuela where people use cryptocurrencies their everyday life. Recently, several partner companies from the digital payment sector announced that they will expand Bitcoin adoption to over 25,000 locations in France.

According to Le Figaro, Bitcoin will be available at some 30 franchises in France, including big names like Foot Locker, Decathlon, Conforama, Sephora, and Intersport. The massive expansion is planned to take place by 2020.

It seems developed countries like France show that the previous anticipation of crypto experts could be wrong and cryptocurrencies would adopt in a country with developed and stable economy earlier.

What do you think? Can you guess in which country crypto adoption would occur first?

“Experts have expected that crypto adoption would take place in countries suffering from economic crisis, such as Venezuela where people use cryptocurrencies their everyday life”