People work extremely hard to make money because they desire the good things of life and to do the things that please them. However, if the value of their country’s currency keeps tanking every now and then, they will seek a way out of the challenge. From what initially appeared as a trivial disease, coronavirus became a full-blown pandemic, threatening the global socio-economic activities. In short, the deadly COVID-19 virus shattered dreams, disrupted economic activities on epic proportions, and killed nearly 3 million people worldwide (according to the World Health Organization).
The novel virus saw several governments lock down their economies and forbade the citizens from leaving their homes. Indeed, lockdown became a widespread government strategy for containing the novel virus. In turn, it has shrunk the economies of several countries, leading to limited cash flow and economic activities. On the other hand, the exchange rate of fiat currency keeps nosediving, leaving a number of countries with weak currencies. Consequently, the role of Bitcoin, a decentralized internet currency, become a larger part of the global economic conversation. But is Bitcoin the way out of this economic morass? Well, you will find out shortly.
Fiat Currency is on Steady Decline
To have an in-depth understanding of the role of Bitcoin, it would help if we examined some of the weak currencies.
Iranian Rial (IRR): One currency that steadily dipped before the COVID-19 outbreak is the Iranian rial. The Islamic country witnessed economic downturn due to sanctions imposed her. As a result, the Middle-East country could not export its crude oil, the country’s major income earner, culminating in weak rial. At the time of writing, the US Dollar to rial exchange rate is 42,105 IRR.
Vietnamese Dong (VDN): Located in Southeast Asia, Vietnam is one of the countries grappling with a serious economic slowdown. Its centralized, small economy has shrunk over the years. The impact has seen investors vacate the country, thus worsening its economic woes. Its currency, the dong, has had its fair share of the situation. Today, its exchange one USD to the currency is 23,079 VDN.
Indonesia Rupiah (IDR): Indonesia made the growing list of countries whose currencies have become nearly worthless over the years. Admittedly, its national currency is relatively stable. However, its exchange rate leaves so much to be desired. Kudos to its government though because it works round the clock to turn its tides. Sadly, the concerted efforts seem futile. Today’s exchange of one US dollar to the rupiah is 14,622.05 IDR.
Uzbekistani Som (UZS): When Uzbekistan started using som in 1994, it was pegged to the US dollar. It became apparent that the currency was mainly flourishing in the black market. By 2017, the national currency struggled to maintain its footing against the US dollar. To save the impending economic doom, the government stepped in and devalued som by half. Truly, the move resulted in a stable currency. However, it remains relatively weak, with one US dollar going for 10,291 UZS today.
Venezuelan Bolivar (VES): In recent years, the Venezuelan bolivar has hit the headlines of several leading finance newspapers due to the country’s worsening economic doldrums. These woes are occasioned by a number of factors, including political instability, falling oil prices, international sanctions, and an elitist business climate. Today, one US dollar exchanges for 2,330,071 VES.
Is Bitcoin the Way Out?
From Iran to Vietnam, Indonesia to Venezuela, there are weak currencies all over the world – no thanks to the COVID-19 pandemic and socio-economic reasons. Studies have, however, shown that countries turn to Bitcoin to cushion the effects of their economic challenges. Those critical use cases of the cryptocurrency are indispensable. For instance, Venezuelan took a bold step when it dropped its natural currency and links to the US dollar. Afterward, the South American country tied its national currency to Bitcoin. Before the government took the crucial decision, hyperinflation had hit the country, with one USD exchanging for millions of VES.
In October 2020, Iran turned to Bitcoin to evade exacerbating economic turmoil due to sanctions and coronavirus. The Islamic country amended its laws to fund its imports because it was starved of the US dollar – a widely accepted international trading currency. The new legislation allowed miners to supply Bitcoin to the Central Bank of Iran (CBI). The country had legalized mining the previous year.
In short, these are some of the instances where countries have had to adopt Bitcoin in an effort to salvage their deteriorating economic conditions. Similarly, individuals and investors should always convert their savings to Bitcoin in times of crisis, as the cryptocurrency has sustained a sterling growth trajectory over the past decade. Beyond a shadow of a doubt, this strategy will reduce the harsh effects of the weak currency on their lives. In conclusion, Bitcoin is the way out in cases of uncontrollable fiat currency depreciation as we have seen in several countries.
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