Inflation is one amongst the many negative terminologies of the market which affects the government bodies, investors as well as consumers. Inflation completely depends upon the economic conditions of a country.

Inflation can be defined as a considerable increase in the moderate level of prices of commodities/goods as well as services in a particular country. Inflation can be measured by determining the change in annual percentage. The pricing of goods and services increase with time in the inflation-duration. It means that the value of money reduces during inflation.

Inflation in Fiat Currencies

Fiat money is not intrinsic in nature that is the reason why it is not at all related to commodity money. It attains its value from government decree so that it can be legal tender. Fiat currency has its value because people living in a country put faith in the hands of the government. Fiat currency gets highly affected with inflation.

With traditional fiat currencies, there exists no transparency and no one knows how much money is being circulated and on what basis central banks are printing money. Many sound economists who have been practicing these things since ages have concluded that regulatory authorities are the main reason for the inflation because they print the redundant amount of fiat currencies.

One more reason for the same can be considered is that fiat currency is also used in electronic format, and in turn, the electronic form is being utilized to manage public’s funds. Due to the introduction of the electronic medium to store and exchange money, crimes are increasing.

Fiat currency i.e. cash is comparatively difficult to track, and in turn, reduces transparency. There exist many agencies that keep on tracking and spying the public money for their own use. With such rights, the platforms like PayPal and many banks seize the money of many users.

There are also many currencies that have lost their value due to hyperinflation, defunct government bodies, redenomination and much more. Inflation basically means money being valueless. As all the civilized countries are using Fiat Money, this is a matter of concern for economists as well as consumers.

Inflation in Cryptocurrencies

Cryptocurrencies’ deflationary quality is based on the fact that a currency should be in short supply for it to become more valuable. By restricting the production amount in a system, it can be concluded that no one can amplify the supply and that’s why it is almost impossible to inflate the value in comparison to physical goods.

Using a cryptocurrency, people may transfer their money in an unregulated manner through their own dominance. Cryptocurrency users can easily use the decentralized currency to perform the transactions that are fully untraceable and cannot be interrupted by any third party. While using cryptocurrencies, taxation can be ignored. With cryptocurrencies, no banks are associated, and in turn, no interest rates, that’s why there is no fear of negative interest rates.

The acceptance for the cryptocurrencies is increasing day by day and more people are trying to know about the concept behind it. As soon as its supply increases, demand does increase too. According to the calculations, the increase in demand rate is much higher than any supply inflation. It assists in increasing the value more than enough to compensate supply inflation.

After discussing all the possible scenarios, we can conclude that cryptocurrencies are deflationary in nature and can give birth to a world that would be free of inflation if used suitably.

RILCOIN (RIL)

Rilcoin is a cutting-edge crypto technology-based, fully decentralised crypto-currency, which actually has all the benefits of fiat currency as well the freedom and anonymity of a crypto-currency. Rilcoin is a part of an Asset Management System (AMS).

Rilcoin is an upcoming cryptocurrency that would be based on a technology equivalent to Fiat Currency. Some of the features which would not be similar to fiat currency will be made suitable using smart contracts. Its flexibility to adopt all the benefits of fiat currency makes it an exclusive one among all the other cryptocurrency. It would be the first ever cryptocurrency owning qualities of fiat currency.

Pin It on Pinterest

Share This