Inflation tests crypto’s role: Raj Chowdhury

  • May 17, 2022
  • Jennifer Moore
Inflation tests crypto’s role: Raj Chowdhury

The current 0.4% hike in the US Fed Rates forced the world to acknowledge the ongoing inflation. Designed to be a hedge against inflation, cryptocurrencies have, in recent times, not been entirely successful in their objectives, as reflected by crashing stablecoin valuations. Raj Chowdhury, the CEO of PayBito, however, is still optimistic, mentioning how the current global scenario provides an opportunity for digital assets like cryptocurrencies to exhibit their actual abilities. 

Global Impact of Inflation

In layman terms, inflation reduces the value of a county’s fiat denominations. The decreasing US valuations forced common people to look towards high-yielding alternative assets such as cryptocurrencies. Compared to traditional assets like gold and other commodities, virtual assets have been artificially developed to be immune to fiat fluctuations. 

CEO Speak

The PayBito Chief, also an eminent blockchain pioneer, stated, “The entire idea of cryptocurrency originated from the quest to find a solution that remains unaffected by the government’s financial decisions and deviations in currency value. Digital assets bypass intermediaries resulting in lower payment processing charges.”

Rising Crypto Adoption Worldwide

The adoption of digital assets has been historically higher in countries struck with high inflation. Examples include Brazil,  India, Mexico, South Africa, and more. In comparison, countries with developed economies perceive cryptocurrencies as a promising alternative investment, but not an absolute “necessity”. Crypto adoption grew leaps and bounds over the world in 2021, with 41% of owners being crypto buyers for the first time. 

“For cryptocurrency to truly succeed, it is crucial to remove its volatility. Despite rapid development, liquidity and scalability still remain the main crypto challenges. Deflections exceeding 10% in a short time, even within the span of a day, is not exactly uncommon,” mentioned Chowdhury.

An estimated 51% of Brazil’s crypto owners acquired virtual assets for the first time in 2021, as its national currency depreciated 218% in value within a decade. In addition, there are growing talks among neutral nations about keeping Bitcoin as a reserve currency after the imposition of Western sanctions on Russia for its invasion of Ukraine. 

Wrapping Up

The ongoing US inflation in addition to the stablecoin crash makes it an opportunity for non-pegged digital assets like BTC and ETH to rise above as efficient financial instruments. Once the aspects of volatility and scalability are resolved, we may very well see cryptos functioning exactly like they were intended to do- as a hedge against inflation. 


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