As a thermometer of the health of a currency, the best economies in the world show an annual inflation rate below 1.5%. In economic terms, the closer to zero inflation, the more reliable a currency is, because it does not fluctuate significantly. But in countries whose economies are not very developed, many in Latin America and Africa, for example, inflation can easily reach 10 digits. Zimbabwe in 2008, for example, suffered from hyperinflation. Inflation erodes the purchasing power of a currency compared to stable currencies, and pushes the population to seek alternatives to preserve their wealth.
The reasons that lead a country to confront inflation are diverse and vary from place to place. The same applies to deflation, recently experienced by Japan. People accumulate their money, instead of spending it, causing a domino effect in the economy. Prices fall, jobs are lost and businesses close.
Given the high volatility of Bitcoin for example, it can be difficult to understand how this new Internet currency can act as a good stock reserve mechanism. However, by comparing the price fluctuation rate of bitcoin with some currencies of underdeveloped countries, bitcoin becomes an interesting alternative.
Unlike traditional currencies, and especially the US dollar, bitcoin cannot be issued at the pleasure of a monetary entity. Follow the rules that are written in your protocol and very transparent, everyone knows how many bitcoin are in circulation and how many will enter circulation over time. Thus, the recent situation is totally ruled out, as when the Federal Reserve Bank of the United States decided to issue billions and trillions of dollars to boost the US economy during the 2008 financial crisis, devaluing its currency. The same happened with the European Union during the same period. The issuance of more coins causes the money to lose value.
In addition, countries with strong capital controls, such as China and Russia, are easy prey to bitcoin technology, since from the moment of buying the digital currency it is possible to send it to any part of the world in a few minutes.
And this is exactly the same case of iCashweb.
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