Bitcoin (BTC) has the potential to solve the problem of global income inequality, as it acts as a commodity and an asset at the same time and can be priced according to market demand. analysis from Forbes..
Today, investing in hard assets is the only type of asset that grows at a rate similar to inflation, so it is the most preferred way to provide inflation hedging. The problem of inflation hedging seems to be resolved, but it further divides income inequality.
The article states:
“The sharp rise in the price of hard assets reveals a broader problem in the global economy. That is, the polarization of the economy. This is hard where 1% have to continue to pay 99%. It refers to the problem of inequality in owning most of the assets. “
Pandemics have played an important role in the polarization of the hard asset market. Initiations such as securities-backed mortgage campaigns issued by financial institutions have generated cash flow. However, due to the pandemic situation, financial institutions were unable to invest these funds. That’s why they depended on the hard assets that polarized the market.
Even if the effects of the pandemic diminish, polarization is far from healing. Current events such as the conflict between Russia and Ukraine continue to raise food, gasoline and shipping prices around the world. As a result, inflation continues to rise and the hard asset market is becoming more polarized.
How can Bitcoin solve this?
This article argues that the world economy will not recover naturally. it says:
“If things get worse, the government will be forced to print more cash in the form of basic income (UBI). This new money will make the average household basic food, housing, health care, etc. It may be distributed using bottom-up rationale to make things available for purchase. 1% of the rich will be richer and 99% of the poor will be poorer. “
Pricing and hedging
Bitcoin is both a commodity and an asset. In addition, its price is determined by market demand. Bitcoin’s supply is reduced by that code, and as companies continue to invest in it, demand and prices will only increase in the future. This increase is very likely to exceed inflation. Therefore, Bitcoin works best if you want to store value and provide inflation hedging at the same time.
Owned
Another advantage of Bitcoin is that it gives the owner full ownership. In other words, it cannot be confiscated or manipulated like hard assets such as real estate, energy and land.
This brings extraordinary benefits in political or economic agenda. In the case of war like Russia, or in the case of unusually high inflation like Turkey, cryptocurrencies can help.
Will Bitcoin Save the World Economy?
It’s absolutely clear that the solution is in Bitcoin, but the article also mentions that it’s not completely ready for action.
Despite the argument suggesting that Bitcoin is separated from the traditional market, the article still states that it is highly correlated with traditional market movements.
Bitcoin will remain the trading currency until it is properly decoupled from the traditional market and begins to operate individually. It will also be a decent value store and will give Bitcoin the power to save the world economy.
