Could Bitcoin’s decentralization spare it from a looming recession?
As the United States appears to teeter on the brink of a recession, many are bracing their finances. That could mean everything from contributing more toward emergency funds to paying off high-interest debt accounts — but it could also mean investing in a currency that has the potential to withstand both inflation and recession.
As the first and oldest cryptocurrency, Bitcoin has seen turbulent times. After all, it was created in 2009 on the heels of the Great Recession. That modern-day, widespread failure of our conventional financial system prompted Bitcoin’s founder to develop a decentralized digital currency.
Again today, the country — and the world — faces recession due to a combination of factors, some spawned by the COVID-19 pandemic, like supply-demand imbalances, war and rising energy and food costs.
And with the consumer price index (CPI) climbing to new heights — in July, the Labor Department reported that the CPI was 9.1% higher in June than it was just a year ago — credence is given to economic forecasts that predict imminent recession, if it hasn’t started already.
All this talk may drive demand for options that aren’t so closely tied to government actions and indices. Here’s what you should know when considering whether to invest in cryptocurrencies when a recession is looming.
A recession-ready option?
Cryptocurrencies didn’t exist during the last major recession, which means this new asset class could demonstrate new benefits, especially as a source of stability.
Unlike government-backed (or fiat) currencies which can lose value rapidly due to inflation, Bitcoin is its own robust financial system designed to experience rates of inflation that are both low and predictable.
That’s because Bitcoin’s supply is fixed, and a limited number of coins can be generated each year. This is a very different concept than government-controlled currencies, which can be manipulated by changing interest rates or when a central bank simply prints more money.
Bitcoin’s fixed supply and decentralized nature may prove key in a crypto victory against inflation — or impending recession. And what some might see as a weakness may also be Bitcoin’s greatest strength: No ties to a single government or economy could serve as a safeguard in an ever-changing marketplace.
The finite number of bitcoins, coupled with the blockchain technology that is used to verify all crypto transactions, also has an infinite future — not only fighting inflation in the short term, but providing possible long-term solutions to everyday financial woes.
Around the world, some people in less-stable economies are transferring their money to blockchain-based digital currencies as a way to preserve their money’s value, further signifying a possible recession-proof solution.
Financial experts, here to help
Luxolo Financial’s advisors are here to help you navigate the nuances of crypto, offering a customized level of personal service and support that those looking to invest in cryptocurrencies won’t find elsewhere.
Bitcoin is easy to invest in, transfer and use. Because crypto is digital, all you need is access to the internet. Luxolo makes it even easier to buy with its in-person cryptocurrency exchange desk that helps you invest with confidence. This signature service is included with each desk order and provides an orientation into the world of cryptocurrency and an invaluable, two-way discussion between you and a Luxolo expert.
These days, inflation is not only driving up the prices of everyday purchases but eroding the real value of investments. In today’s uncertain times, it may be the perfect moment to try an option that may be built to withstand even the toughest economic pressures.
With the help of a trusted financial expert, you can learn more about Bitcoin and why it might be the right choice, right now.
Learn about strategies for investing in cryptocurrencies, like Bitcoin. Book an appointment today and let one of Luxolo Financial’s experienced and knowledgeable agents help you acquire your own Bitcoin wealth.
Members of the editorial and news staff of Paste BN Network were not involved in the creation of this content.