Can Bitcoin Be Used As Hedge Against Inflation?

According to reports, the global Bitcoin mining industry is dominated by China. A large number of Bitcoin mining farms can be found in Inner Mongolia and other remote parts of the nation where the cost of electricity and computer hardware is cheap. While the government of China is cautious about the Bitcoin trading transactions happening all over China, the people assume that the digital currency is their hedge against the erosion of the Yuan’s purchasing power.

The popularity of Bitcoin mining has certainly surged in China because of the presence of banks in the remotest parts of the nation. The Chinese can open a bank account in as fast as 10 minutes and get a debit card immediately after an account has been opened. Both the rich and poor Chinese enjoy convenient banking access with no questions asked. Banks including the post office provide efficient services for money transfers. A lot of payment operators that include Alibaba, Tencent and Unipay also offer transfer services at very cheap prices.

Unlike the Western World that enjoys a lot of freedom when it comes to choice and judgment, the Chinese are no so in tune with the political philosophy of libertarianism. In fact, most of the Bitcoin players are not even concerned with the security of their transactions. The most logical explanation for the popularity of digital currency is China’s real fear over inflation.

While it is very unlikely for Bitcoin and other crypto-currencies to become a medium of exchange in the near future, it can be used to store value and for asset diversification. Inflation rates in China are a major cause for concern even if it has not reached the levels of Argentina’s problems. As a result, the Chinese will consider Bitcoin as their hedge as the purchasing power of the Yuan continues to erode.

Miners use software for their Bitcoin mining transactions. Miners obtain their Bitcoin when they buy on an exchange, when it is accepted as payment for goods and services and when new ones are mined. Mining is the language used to discover the digital currency which is similar to mining gold.

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