“I’m going to take my next paycheck 100% in bitcoin… problem solved!”
– Mayer Francis Suarez
Introduction | The Looming Threat of Hyperinflation
The era of COVID-19 and trade wars spurred an international arms race in printing money. With China’s monetary authority having reported the issuing of more than 9.62 trillion yuan in 2021 and 13 trillion dollars printed in the United States respectively, many experts warned that the practice of printing money to offset deficits will result in major economic risk.
Without a doubt, this is not the first time in human history where a government’s decision to print large amounts of money resulted in hyperinflation, most notably, the Yuan Dynasty, a decision which ultimate lead to the dynasty’s collapse. Other instances include the Crisis of the Third Century in Ancient Rome and the 1,000,000% inflation of the drachmae.
Cryptocurrencies | Hedge Against Inflation
One of the stated objectives of Bitcoin is for the virtual currency to become an inflation hedge. To this end, the theory behind Bitcoin as an inflation hedge whilst the number of Bitcoin is limited to 21 million, the number of U.S. dollars (or other fiat currency) typically increases over time at the discretion of the host government.
As such, with the looming prospect of hyperinflation on the horizon, cryptocurrency as the medium of renumeration is gaining popularity, with an ever-increasing number of employers are starting to consider paying salaries to their employees...
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