Binance CZ using his Twitter handle is warning that Fiats are no safer as they were considered. Fiat currencies have been considered stable across the globe. At least that’s what governments and financial regulators say. But the recent economic crises in Turkey and some Latin American countries such as Venezuela, Argentina, and Brazil their respective fiat currencies have taken a nosedive.
The Turkish turmoil
Turkish economy suffered an adverse reaction to Trump’s tariffs on Turkish steel and aluminum, the Lira crashed by over 20 percent within a few hours. This drove investors not into the traditional safe-haven asset of gold, but into bitcoin instead.
Koinim, Turkey’s largest exchange, reported a 63 percent increase in Bitcoin trading volume, and the BTCTurk and Paribu exchanges have seen volume increases of 35 percent and 100 percent respectively. This pushed the price of bitcoin in Turkey up to $7000—over $500 higher than the Brave New Coin Bitcoin Liquid Index, which is based on the majority of global trading activity.
Although bitcoin might not be acting as an everyday medium of exchange, Turkish citizens are flocking to it as a safe haven asset—a way of escaping the swings of the Turkish Lira against the Dollar, which make even the fluctuations of bitcoin look calm.
Also, read: Binance CEO Says Bear Market is Receding as Future is Bright for Crypto Market
South American mess- Venezuela, Argentina and maybe Brazil
The economic prospects for Latin America in 2018 is grim. With political instability in some of the region’s largest economies, as well as a general slump in prices in oil and other commodities, businesses and consumers are facing a depression and, in the case of Venezuela, economic collapse.
The crisis facing Latin American economies did not begin in 2018 it all tracks back to 2015. Argentina, Venezuela, and Brazil ended 2015 with serious economic problems, including huge inflation rates — as high as 275 percent for Venezuela (63 percent for 2014), ~30 percent for Argentina (36.4 percent for 2014) and 10.4 percent for Brazil (6.3 percent for 2014).
For Argentina, the country’s currency, the peso, was pummelled significantly in the last 3 years it was down 15% against the dollar in 2017. The 2017 drop was on the back of the 34% loss in 2015 and an 18% decline in 2016. 2018 too did not change the fortunes for the country as Argentina’s peso tumbled to a record low. The same has been the case with Brazilian Real but the central bank has intervened
Venezuela has problems of his own, Its inflation is at 82766.0% as reported on Trading Economics because of which the Venezuelan bolivar has approached absurd levels. The Venezuelan government’s response to the rising inflation rate has been the creation of their own “cryptocurrency”, dubbed the Petro, which is supposed to be backed by the country’s oil supply. However, given the mismanagement of the current bolivar by the very same government, in addition to concerns over how a fully centralized cryptocurrency would function (the reality is the currency is more digital fiat than crypto), has led to Venezuelans abandoning the project in droves before it was even able to take off.
Prominent voices say fiats not completely stable
Today using his twitter hand CZ of Binance said: “fiat does not imply stable”. Along with this, he posted charts of Turkish Lira and Argentine Peso being under the solid pressure of countries crumbling economic condition.
fiat does not imply stable pic.twitter.com/ad0CJYh2nA
— CZ Binance (@cz_binance) August 30, 2018
CZ is not the first one to say this. Earlier Coinbase CEO Brian Armstrong had stated that economic crises taking place around the world over the next 3-5 years could be the catalyst to the organic adoption of cryptocurrencies.
“Countries going through economic crisis and pockets of people in those areas are getting interested [in crypto]. There is interest among those people with the highest pain point in having stable currency […] In the next three-five years countries going through economic crisis could see people organically adopting crypto as an alternative”.
While these countries continue their turmoil and their currencies take a nosedive, people continue to move to the safe haven asset of gold and now to more liquid protector bitcoin. Some commentators also suggest that bitcoin is chipping away at gold’s dominance.
Will Cryptocurrencies take away Dominance of Fiats as well? Do let us know your views on the same.