Is crypto becoming a viable option in the wake of the rising inflation?
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A lot of things happened in the first quarter of 2022. For instance, there is another lockdown in China due to the rising number of Covid19 cases. There is also the ongoing conflict between Russia and Ukraine, and recently, we saw Sri Lanka’s declaration of bankruptcy. With disruptions like these happening in different parts of the world, is crypto a viable choice when the price of everything increases? Let’s discover.
Exploring Sri Lanka’s bankruptcy
Sri Lanka’s government declared the country bankrupt. As a result, the administration announced a temporary ban on all external debt repayment. They stated that they are no longer honoring their commitment due to a deterioration in their financial condition due to external and internal crises. This action puts an end to Sri Lanka’s great track record of meeting its external debt obligations since its independence, but a “negotiated or soft default” is more respectable than a disastrous “hard default.”
Treasury Secretary Mahinda Siriwardena told journalists that the “orderly and consensual” restructuring of external debt obligations would be reinforced by an IMF-supported economic assistance package (IMF).
He observed that since its independence in 1948, Sri Lanka had maintained a spotless record of external debt servicing.
“However, recent developments such as the COVID-19 pandemic and the consequences from the Ukraine wars have undermined Sri Lanka’s budgetary position,” he stated.
“The IMF concluded late last month that Sri Lanka’s debt stock is unsustainable.” Although the government has taken extraordinary measures to keep all of its external debts current, it is now evident that this is no longer a viable policy and that a comprehensive restructuring of these liabilities will be required,” Finance Ministry Secretary stated.
Sri Lankans protested about the soaring inflation associated with the bankruptcy. In addition, the national government announced fuel rationing on Friday (April 15).
The nation is currently experiencing the worst economic crisis since its independence in 1948. There is a severe shortage of essentials and regular blackouts, which worsen the situation. With these, the country’s central bank governor reached out to Sri Lankans abroad to help the country during this economic crisis by donating foreign exchange.
The financial crisis in Russia and Ukraine
On the other hand, Russia is also experiencing a financial crisis after the US set sanctions on the country. The Russian ruble drastically lost its value, which dramatically affected Russians.
On the flip side, due to the effect Ukraine had experienced from the war with Russia, some of its residents turn to cryptocurrency as a way to save them from hunger. Refugees have saved a few cryptocurrencies and converted them into different fiat. This provides them with some funds while they wait to return to their home country.
Crypto as a way to save your funds
One of cryptocurrency’s amazing features is the fact that it is decentralized. The economic crisis only has a very minimal effect on the prices of digital assets. In addition, the flexibility of cryptocurrency to be exchanged into different currencies is also one of its advantages over fiat currency. With that, cryptocurrency can become a viable option for everyone and probably save them from such crises.
However, cryptocurrency comes with risks. Even though it does not feel the impact of economic crises, some factors can significantly pull down the price of the tokens. China’s recent banning of cryptocurrency affected the price of Bitcoin, consequently affecting other cryptocurrencies. The token is currently showcasing a great performance as BTC’s resistance is back to 40k USD. However, there are still other risks associated with cryptocurrency.
Impermanent loss and scalability are still some of crypto’s significant drawbacks. The possibility of being hacked and other crypto-related crimes add up to the possible risks of cryptocurrency. Thus, many people are still doubtful about using the token. In addition, there are still countries that do not recommend cryptocurrencies.
PrivacySwap’s DEX and PrivacyCard: a way to bind DeFi and fiat transactions
PrivacySwap is a platform that aims to provide utility to both DeFi and fiat transactions. We aim to achieve this goal through our DEX, which offers more ways for you to leverage your crypto assets in the DeFi space. Users can exchange their crypto holdings for various cryptocurrencies. You can also stake on the high APR farms and pools. Buy, sell, trade, and play on our NFT-related features, and participate in the IDO launch of various crypto startups.
Through PrivacyCard, we aim to allow people to use their cryptocurrency as fiat through card transactions. The token you invested in the platform is also withdrawable on all supported ATM terminals worldwide. Therefore, you can avoid the long, painful, and sometimes expensive crypto to fiat conversions. All of these can be experienced only at PrivacySwap.
Conclusions
A lot has happened in the first quarter of the year-the pandemic, the war, and the never-stopping inflation that shows no signs of stopping. Though the government is taking necessary actions to solve these problems, citizens should also move in order to protect their hard-earned money.
Though crypto is risky, especially for those new to the market, it could provide an excellent return for those knowledgeable in investing. If everyone starts paying attention to such digital assets, everyone could find a way to save their funds from further inflation. However, not every platform is legitimate. So, always do your research before investing.
Come and join PrivacySwap now!
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