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June 18, 2019

Combating hyperinflation with cryptocurrency in volatile economies

Cryptocurrency saving

Saving money can be possible despite volatility in a country’s economy.

If you know anyone who lives in a country with a volatile economy, you might know that it is exceptionally difficult to save money.

Using another volatile asset, such as Bitcoin, is probably not the best solution to combat volatility, but that doesn’t mean we should rule out all cryptocurrencies. In fact, stablecoins which are pegged to a national – or fiat – currency might be the answer to the problem of trying to save money when financial stability is limited. MakerDao, a cryptocurrency-backed stablecoin, is valued at a 1:1 ratio to the US dollar and only fluctuates in price as the country’s tender does.

Through Coindirect Business, buying MakerDao using local currencies and credit cards is a simple process. This means the option of storing your money as US dollars is opened up to areas which have struggled to exchange local currency for forex previously. Saving effectively becomes possible and the risk of losing money to currency swings diminishes at the click of a button.

Transferring local currency into MakerDao is also not a one-way process. Should you need to hold your local currency, it’s just as easy to exchange the US-backed stablecoin back at any time.

Remittance using cryptocurrency

Since volatility in an economy makes it difficult to save, often family members in different countries will send money back home to support them.

For example, Rudo works in South Africa with her sister. They send money to their father in Zimbabwe to help support their family back home. Getting the money to him can be a difficult, risky, and expensive task.

Rudo has two options to send money back home:

  1. Relying on someone who is travelling to Zimbabwe, giving them cash and hoping it will get safely to her family.
  2. Using a remittance company.

If Rudo chooses the first option with cash, there is a risk of money not reaching her family, as well as significantly facing exchange fees.

Sending money internationally with cryptocurrency

With cryptocurrency, there is a better way for her to send money straight to her family. If Rudo uses Coindirect, she can exchange her South African rand for Bitcoin, send her father the Bitcoin, and he can exchange them for his local Zimbabwean dollars. This is doubly advantageous for everyone because of the risk-free security as well as the speed. Her father doesn’t need to wait for any cash to arrive and can be certain that the money will arrive on time.

Using a remittance company to send money home

If she decides to go through a company, many of the issues Rudo might face are alleviated, which makes it easier and safer to part with her cash. However, there are still hefty banking fees involved when the currency changes from one national tender to the next.

With the rise of cryptocurrencies, there is the opportunity for remittance companies to offer a cheaper, quicker alternative way of sending money across borders. As merchants in remittance, offering a feature which allows customers to pay in one fiat currency and let their family receive in their nation’s fiat, creates a space where different options can mean better rates which in turn results in more customers.

Through Coindirect Business, remittance companies can integrate simple on and offramp features onto their platform, allowing customers to pay in fiat and their family or friends receive their local fiat across the border.

The transaction from fiat-to-crypto and crypto-to-fiat is a simple one, with no lengthy waits and hefty fees involved. This means that your customers will have great service with no stress.

A global marketplace with Bitcoin

As the globalisation of industries becomes more prominent, coupled with the world expanding online, the need to cater to a global marketplace has increased rapidly.

Nothing sounds better than pairing the future of the industry, commerce, travel, and retail with the future of money. Bitcoin payments are beneficial for merchants and customers because the streamlined process means businesses will receive instant cash-flow and their customer have alternative methods of payment.

Coindirect Business offers a plug-and-play integration on platforms and business sites which allows customers to pay in cryptocurrency or local currency. The merchant can also choose to receive the same or a different cryptocurrency or accept the payment in their local currency.

Not only does this make it simple for tech-savvy countries to take advantage of easy and instant payments, but it also means that the marketplace is opened to less-economically and tech developed countries.

Read more about Coindirect Business