Cryptocurrency

Cryptocurrencies Coins and Fiat, only one will live

These are uncertain times for the global economy, a situation that brings consequences both to the traditional markets, such as for the of cryptocurrencies. And is that, during the crisis of the Coronavirus, governments around the world have flocked to the issuance of currency as a mechanism to avoid the collapse of their economies. However, at the end of the day, the devaluation of the currencies Fiat is not an opportunity for the cryptocurrencies?

The crisis of the Coronavirus and the central banks

Since march of this year, it was clear that the crisis of the Coronavirus would not be like the other crises that we have faced in the last century. Therefore, the disease born in the city of Wuhan, has put humanity to its knees. Forcing billions of people around the world must remain at home to try to secure our lives. This, even though it is right in front of a virus that we don’t have any means to fight, generates important consequences in the economic plan. Therefore, to prevent millions of people attend their jobs, the Covid-19 has affected the activities of commercial and manufacturing companies throughout the world. Because of this, most of the countries face what is expected to be a tough economic recession in this year 2020. Which could become a global depression continue for a long time. Forcing governments to intervene to prevent a total collapse of their societies. Using one of the best tools available: the coins fiat. And it is that, faced with a virus that forces the stalling of the economy, the States have implemented stimulus plans billionaires. First to support all those that are not generating income for them and their families during the crisis. And second, to rescue companies that are in trouble by not having sales, so need an injection of coins to Fiat.

Devaluation of currencies fiat: An opportunity?

The big problem of these measures, are the consequences that a broadcast exaggerated currencies Fiat might have on its value. Since, as we indicated in the law of supply and demand. When the supply of an asset increases at a much faster pace than their demand, the tendency is that its value decreases. As well, as several analysts of the crypto market, including Anthony Pompliano and Changpeng Zhao, have anticipated a devaluation of the currencies of Fiat, due to the rescue packages by the government. Which, could generate mistrust among the population towards the currencies of Fiat. Benefiting, in the last term to the cryptocurrencies. The devaluation of the currencies Fiat has not yet reached, but the market cryptocurrencies as Bitcoin keeps rising. Source: CoinDesk, Because, if it comes to a situation in which more and more citizens distrust their currencies to Fiat. The result will be thousands of people looking for an alternative means to protect their capital. Away from the loss of value that would suffer if maintained in currencies Fiat. In this way, Pompliano, Zhao, and who expect a devaluation bulk of the coins to Fiat, they believe that will bring a flood of capital to the crypto market. By increasing the value of currencies such as Bitcoin, and increasing their use at the global level. Of course, this is not a forecast indisputado. Well, there is another group of analysts who predict that there will be a devaluation of the currencies Fiat, but rather the opposite. For these experts, in the coming months will see a strengthening of the dollar, compared to an increase of its demand by countries trying to revive their economies. So, at the end of the day, we will have to wait still a few months to see those who have reason in this debate.

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About the author

Caroline W.

Caroline W.

Caroline is passionate about learning languages, cultures and the Internet. She has years of experience working at international online advertising projects. Growing interested in Bitcoin and cryptocurrencies in late 2018, she joined CurrencyMarket24 as a writer.

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