Most currencies in the top 10 including the Chinese yuan, British pound and Indian rupee ended up recording significant annual losses, with the Chinese yuan demonstrating drastic devaluation, the GBP reaching one of its all-time lows and the Indian rupee falling behind as well.
How Bitcoin Sustains Rapid Growth & Price Increase
Coincidentally, most of the reserve currencies above mentioned that failed to meet the expectations of investors, businesses and traders are still currently undergoing severe economic and financial instability. The Chinese yuan, which showed an annual loss of 6%, declined substantially despite the government’s desperate attempt to prevent devaluation. Experts predict that as the Chinese New Year approaches, a larger amount of cash outflow will be requested and the Chinese yuan will decrease in value even more.
The British pound also had one of its worst years in recent history after its decision to exit from the European Union. The value of the British pound plunged almost immediately after the announcement was announced, leaving the economy in panic and chaos.
Amid this global economic turmoil, bitcoin recorded a 54% increase in value mostly due to increasing realization of bitcoin as a store of value and the general population’s development of awareness towards the devaluation of cash and excessive financial control of the government.
For instance, when the Chinese government announced a major plan to crackdown on wealth management products (WMPs), which amounted to over $3.9 trillion, the demand for bitcoin surged, pushing the price of bitcoin to 5,000 CNY in the Chinese bitcoin exchange market. Investors and traders were buying bitcoin at a 10% premium to ensure that their wealth is not affected by tightening regulations imposed by the local authorities.
Also, as previously covered by Bitcoin.com, best-selling financial author Holger Zschaebitz discovered a correlation with assets like gold and bitcoin. Zschaebitz noted that whenever precious metals like gold declines in value, the price of bitcoin rises, implying that investors and traders are beginning to see bitcoin as the global safe haven asset instead of gold.
Two of the major factors that allowed the mainstream population to acknowledge the benefits and advantages of bitcoin over traditional forms of money is bitcoin’s transportability and decentralized nature. The fact that bitcoin can be sent anywhere to anyone in the world without the presence of a third party or regulation of the government played a vital role in the increasing value of bitcoin.
These two features of bitcoin-enabled individuals in chaotic economies such as Venezuela and India pushed the general population to depend on bitcoin to avoid a crackdown on cash and government’s confiscation of physical assets such as gold.
Source: http://www.nigeriatoday.ng/2016/12/bitcoin-outperformed-all-currencies-in-2016/
