After reading an article where the president of the Central Bank of Brazil exposes his not enough understanding and appreciation about digital currency, that could be this type of boon to citizens of my native country, Brazil.
I feel that the easiest way to describe it’s through practical examples, so I’ll summarize my experience with the legal tender currency of my country.
I was born in 1981, through the decade of hyperinflation in Brazil, I recall it was normal to begin to see the supermarkets crowded during the first week of the month. The reason being on payday, everyone groceries for the whole month since prices were changed every day, sometimes over and over again a day.
Our money lost value every minute, whilst the government’s printing machine worked at a frenetic pace.
During a decade (10 years) of hyperinflation, several leaders sitting in the chair of the Finance Minister or the President of the Central Bank tried to lessen or minimize inflation. They didn’t get it done the hard way, and just how that may been employed by, by cutting government spending. Instead, these men had pipe dreams, picking out economic plans they thought were most miraculous.
One of these simple pie-in-the-sky plans definitively marked the Brazilian people. During the government of President Fernando Collor, the Minister of Finance, Zelia Cardoso de Mello, confiscated all the cash that Brazilians kept in banks. The concept was simple: without money there could be no demand for products, so inflation could be controlled.
Obviously this didn’t work to save lots of the economy, however it did devastate many Brazilians. Some, like my grandfather, relied on the life savings to cover their medical care. These individuals were badly hurt.
What does history teach us?
To start with, a deflationary currency such as for instance Bitcoin, whose economic model is dependant on that of thinkers like Frederich Hayek, is valuable to any or all citizens of countries that is concern with inflation.
Second, inhabitants of countries which have already experienced economic chaos understand how valuable it’s to possess assets that can’t be confiscated overnight. Today we’ve examples such as Venezuela, and many years ago, Argentina.
There’s a well known saying in Brazil that the dog that’s been bitten by a snake is afraid of a sausage. In Nigeria, you may say “once bitten, twice shy.” Those individuals who have lived through hyperinflation can understand the worth of a deflationary currency.
This is exactly why we like Bitcoin, and why all of the central bankers hate it. Deep down they’re envious, even fearful, of Bitcoin’s economic model. Bitcoin has achieved what’s impossible for them, the creation of the first truly deflationary currency that’s clear of the mismanagement of governments.