Topic: How Does Debt Crisis Boost Cryptocurrencies? (Read 171 times)

To be fair, during the last 2022 crisis, bitcoin failed to present itself as a hedge against inflation and was also bitcoin's first test year for inflation. But we also can not confirm that bitcoin is not inflation-resistant. Unfortunately, 2022 is also the year we enter a bearish cycle after a year of price increases, with inflation or not, bitcoin will still decrease. As of now, bitcoin is still a highly manipulated speculative asset that makes it difficult to act as a hedge against inflation. I believe that in the future, when bitcoin becomes bigger, not manipulated, bitcoin will exert its anti-inflation feature.

You made a valid point that no investment, including Bitcoin, can guarantee income, and that success depends on individual's investment strategy, skill to manage risks and timing. Regarding centralized, it is true that it has existed for a long time and individuals and entities amassed wealth through them. However there are downsides to centralization, such as concentration of wealth which can lead to inequality and systematic risks.

The decentralization nature of Bitcoin is its key feature, as it allows greater transparency, security and resilience compared to centralized systems. Despite  Bitcoin's reliance on fiat currencies for some aspects of its echo system, such as exchange and trading platforms but still it can be used for daily transactions.

I still believe you are very clueless about this, so one can invest long-term in Bitcoin and have a guaranteed profit but they will have a guaranteed loss when they invest in Crude oil, USDX, Gold and others? You are just naive, that's what I can say. No business gives guaranteed income, your speculation, management and expertise will pay off. If you are careless about the time you invest and divest in BTC, you will lose.

As for your claim on centralisation, it's not an obstacle in the real world my dear, it has existed before decentralized means and many have enmassed wealth to themselves via it without a problem. Even Bitcoin will not survive without fiats, or do you spend Bitcoin daily? Let's be realistic.

Debt isn't the issue with currencies. The issue is their unlimited supply which incentivizes irresponsible spending. You could have debt in a crypto economy. However, there is no bail out mechanism in the event of default. If the government defaults on their debt, their solution is to just create new currency instead of managing the debt effectively. The predictable result is that the currency loses its purchasing power through inflation.

Of course, if a country is in large amounts of debt, its within their interest to reduce the value of the debt burden by spending even more money if repayment is in their own currency.

the crash of currencies is going to be slow so we all have time to buy some BTC inorder to hedge. which is also the reason why people buy BTC.
when countries have debt they normally print more of their money, Zimbabwe is always an example of this. Pakistan might also do the same.

but US is also one to watch out for because if they print all countries are affected by inflation. if US has plans to shrink its debt, US can always print dollars to lessen the debt value.

Stablecoins is getting bad example of crypto holdings because our exchangers are weak spot now to break into and have access to these coins. So long term holding of stable coins? I doubt that. In addition to that, SEC is almost everywhere when they see something centralised in the crypto sphere.

Though I’m not taking your thoughts negatively at all I am just making point about the stable coins. Personally they are rivals in the war.

On the other hand, yes bitcoin is making good progress when it comes to the borderless payments or paperless work. The market is growing slowly. There are some huddles like one country might be good at legal tenders of bitcoin while other country may not thus limiting the bitcoin to get their freely. However it is only when someone wants to cash out immediately. If they are happy with bitcoins then we are in happy world already.

Bitcoin is a hedge against inflation. You might claim otherwise because you are not a long-term holder. Yeah, traders might believe your comment but not long-term bitcoin believers. If you have confidence in bitcoin you will hold it until it appreciates. You know what, if you are holding bitcoin, there is hope that it might rise in price which has been the case since last month, but most currencies will never recover after a fall. Most currencies have never risen for many years but bitcoin at least rises after a fall.
Yeah, you might claim that USDX is stable but it is a quasi-centralized currency. Which means you can lose your investment at any time.

You are funny actually, who is freezing your money in the USDX because of inflation? So if they freeze your money, they will now turn to BTC, right? You must be a joker. The USDX has been invested in for centuries, even when the global economy is in a downturn and depression. Investment is an investment, no one has frozen anyone's money in fiat investment because of inflation which does not concern your safe investment.

Furthermore, you might invest in USDX in another fiat currency, so it's all about you, and all fiats cannot be frozen because of inflation. But one thing that is sure is that once the company you are dealing with is not insolvent, you will get your money back. Inflation does not have jurisdiction here, and BTC can never take the place of the USD and fiats in many realities.

USDX? I don't know this, is it some kind of US dollar? All I can say is, when there is inflation going on, it doesn't affect me too much because somehow bitcoin helps me in this situation.

    Meaning, I agree with what others are saying that it becomes a hedge, even if we have different experiences and experiences with inflation, for me bitcoin was already there to become a hedge for inflation.

How did that work in the last year?
You simply can't just issue some coin or label some metal as a hedge against inflation if the population doesn't see it as one!
We had inflation peaking in most of the Western world, the result? Drop after drop after drop, the only time we experienced finally a pump brining back prices to  2017! levels were when we finally had news that inflation is going down faster than expected.
So, how did that hedge fare for the last year or year on year? Really bad, because the same people who decided this have come to the conclusion that money is spent better elsewhere. You can't just have something in limited supply and declare it will be the proper tool to fight inflation if we go by that logic every crypto even all those bitcoin shitclones would do a great job, and we see they aren't.

I wish people will finally understand that you can't have them all, you can't have daily trading with high returns and not experience volatility and you can't have something in which year after year you wait and cheer for wall street funds or corporate investments not act just like the stock market does.

Yeah i'm agree with you some cryptocurrencies, like Bitcoin, are often considered to be alternative investment assets that are separate from traditional financial markets and may be less vulnerable to the impacts of a debt crisis. In some cases, a debt crisis can even increase demand for cryptocurrencies as a hedge against inflation or a declining value of fiat currency.

1.What debt crisis are you talking about? Are you talking about a global debt crisis or a debt crisis in the country where you live?
It has been stated multiple times that Bitcoin can be used as hedge against inflation, but this is partially true. Last year, the inflation levels were really high, but the BTC price dropped severely. Maybe in the long term, Bitcoin might become a good hedge against inflation, but we as HODLers must survive the crypto winter and keep HODLing.
2.The golden rule of finance is to "never keep all eggs in one basket". This means diversifying your assets. Try to accumulate Bitcoin/crypto as well as precious metals and/or stable fiat currencies like US or UK pound. You could try to invest in real estate if you want. Nobody is saying that we should keep all our savings in BTC.

The current financial system in all countries of the world is a corrupt and worn out system that has reached the point where it demands its replacement.

The mortgage crisis that occurred in the United States in 2008 led to the creation of Bitcoin, and now these successive crises of banks and the financial system as a whole will complete the tasks of eliminating this system, and at the same time will automatically enhance confidence in Bitcoin and cryptocurrencies to be the natural alternative.

The ever-increasing inflation, the loss of faith in fiat, the violation of privacy and total control will make more people turn towards cryptocurrencies.

USDX? what if inflation hit and your savings were frozen due to the ubiquitous demand for cash advances to survive the inflation spike? clearly USDX reserves themselves, gold, government bonds, and possibly Real Estate as a store of value during an economic downturn. Regardless of all that, when inflation soars, investors will run in search of safe haven assets, including bitcoin. Despite the fact that Bitcoin is not afraid of inflation, investors are riskier for their holdings to remain in full control than the dollar type which is government controlled and easily frozen at any time if necessary to restrain a large printing press.

It's high time you guys stopped saying that "Bitcoin provides a hedge against inflation," it's a misconception in this present-day reality. Or should we because we love Bitcoin and be blindfolded by it and continue to peddle lies? I guess not, the reality is all over the market. Inflation plagued from 2021-2022, what happened to Bitcoin? It could not withstand it of course and fell for it. Is that what you call a hedge?

The only viable hedge against inflation which is clearly noticed last year is the USDX, it was the only asset in which investors gained while inflation was seriously biting.

Your points are obviously correct, bitcoin is definitely a hedge against inflation and no argument that if I see a wide yearly range of bitcoin it has give mind bobbling returns so volatility can be contradicted with the better returns. So obviously it's a better option than fiat. But one problem that I really feel it has is that in case of a natural calamity crisis, you'll see it will be the first one to lose it's value because connectivity and internet might go down. Economically this is great but practically this can be a problem.

Bitcoin is the only Diflationary asset in the crypto market, I was considering ETH before its POW to POS shift but now obviously BTC is the only one on some instinct as from a point of view bitcoin is also inflationary this is another case.

According to your point no 2 technically, bro you are still at a loss as in crypto you need to forget about the Fial if I am not wrong then in Pakistan last 10 months' USD price increased by 100 RS per USD. Friendly advice never holds money in Banks as you can realize by the recent crisis in Pakistan. Regardless always feel safe with BTC due to its cyclical nature and fixed supply. I am not sure about any other deflationary projects in the crypto market (Burning System is excluded).

The point to be noticed here is No any Local currency here which is deflationary as the primary problem is the reserve system. Interest also plays a bad role in the natural flow of money and services. Inflation and Deflation in crypto and the Local market is a long debate short story is In crypto also BTC is the most and the only if I am not a wrong option that can serve you as the store of value.   

As Bitcoin is the main pillar of cryptocurrency which backed the whole ecosystem of digital currency. by keeping that in mind. I should ask that, how does bitcoin affected by Debt Crisis. According to my Opinion,
1. Bitcoin provides a hedge against inflation as we all know with its property of fixed supply. so that's how bitcoin is supporting the financial ecosystems.
2. Cryptocurrency is a borderless-currency which anyone can buy/sell regardless of region restrictions so if there exists any debt crisis such as i live in Pakistan and Pakistan is near to declare as Default so i would prefer to store my money in valuable assets that can give me profits instead of losses.
For example. I bought 3 ATOMS token for around $54, 6 to 7 months ago. (Time is estimated). which becomes around 8k pkr back then and now these tokens worth $40 and price in PKR is 11k. so why not i should store my assets in different cryptocurrencies or Bitcoin.
3. Why only crypto why not dollars, Pounds etc. to select for storing you money. Because of access to those assets and uncertainty in the financial framework of other countries. or maybe due to less trust on those than crypto as crypto is fully transparent. Because if my national currency can lost its value than why not others.

Note* I am not saying that other's currency must lost value it's just assumption.

Overall, these 3 causes will increase the demand of crypto/btc which in return increase the price of them as supply is fixed and high demand can increase there value. On the other hand. no doubt crypto has its own cons such as volatility which no doubt is harmful at some times. But this volatility is what make others to invest there asset in crypto This Article will do the further explaining of my this point.

What are your thoughts about this and what more factors are there which causes the boot or whatever impact does debt crises could make on crypto/btc.