Bitcoin is seen as an asset that resists inflation because of its structure.. Due to this unique feature, the use of Bitcoin can be very useful, especially for countries with passive monetary policy.
Bitcoin is an inflation-resistant asset
It is a known situation that only 21 million Bitcoins will be mined. This makes Bitcoin not a liquid asset.. However, Satoshi Nakamoto, the creator of Bitcoin, is said to have deliberately created this lack of liquidity to make the cryptocurrency inflation-proof and encourage Bitcoin miners.
According to Professor Max Raskin, Bitcoin’s Its adherence to an inflation rate that halves every four years makes cryptocurrency an ideal model for governments choosing to adopt a passive monetary policy.. Raskin, a writer for the Wall Street Journal, used the following expressions in his column:
Countries that want to adopt a passive monetary policy can use Bitcoin as a model.. Such a policy would have some of the benefits of passive investing.
Governments use a variety of methods and policies to influence the availability and flow of fiat currencies in the market.. By using an active monetary policy, governments influence the size of the money supply and the rate of growth to respond to economic conditions. checks. In addition, the US Federal Reserve has the power to change interest rates and change banking currency requirements.
The use of bitcoin is a suitable tool for passive monetary policy
On the other hand, a government that adopts a passive monetary policy does not intervene to change existing policies. For example, a country with a healthy economy does not want to change its current policies.. However, the need to adopt a passive monetary policy may be stronger for countries with unstable economies.. Professor Raskin specifically states:
Whatever the case for passive monetary policy in the US, it is much stronger for states with a history of unstable monetary policy. Countries like Argentina and Zimbabwe should examine connecting their monetary policy to a Blockchain and using smart contracts to pre-commit to certain rules. has chosen a passive monetary policy when the dollar follows interest rates. Other countries have switched to a more aggressive form of passive monetary policy, preferring currency substitution or dollarization, such as Ecuador, Panama, and El Salvador.
Zimbabwe, domestically since 2009 US dollars, Botswana pula, South African rand Accepts legal currencies such as sterling, euro, Australian dollar, Chinese yuan, Indian rupee and Japanese yen. Bitcoin and its Blockchain technology have brought our civilization to the brink of a new and far-reaching economic revolution.
Economists can review Bitcoin’s properties and use it to change old monetary policies.. Referring to economist Milton Friedman’s dream of a world with more predictable monetary policies, Professor Raskin said:
Technological innovations, including blockchains and smart contracts, have made Friedman’s vision even more plausible.
Bitcoinist