by Marvin Dumont
Apollo all-in-one currency has a limited circulating supply (14.68 billion APLs) that helps holders, investors, traders and merchants gain confidence in the ecosystem. Most cryptocurrency projects, especially Bitcoin, have embraced this monetary model.
Limited currency supply is important from an economic standpoint. Let’s see what happens with the opposite scenario: quantitative easing (QE). QE is expansionary monetary policy practiced by central banks around the world including the Federal Reserve, European Central Bank and Bank of Japan. It reduces fiat’s value over time and causes inflation.
The U.S. dollar has lost 98% of its purchasing value since 1913. The Japanese yen has rapid devaluation. The dollar’s value is actually dependent on OPEC requiring buyers to purchase oil in U.S. currency (92% of OPEC’s oil purchases are in U.S. dollars), and that’s what keeps the greenback from crashing.
There are many countries where high inflation prevails: Turkey (8.5%), Ukraine (7.5%) and Belarus (5.3%), to name a few in Eastern Europe. Thus, it’s no surprise that Turkey is now the third-biggest buyer of gold worldwide, after Russia and China. The bulk purchase of precious metals hedges against a financial crisis, such as currency devaluation, hyper-inflation and/or deep recession.
Consumers and businesses worried about the loss of purchasing power can look to traditional solutions like precious metals (i.e., gold and silver coins) sold by mints and brokers. The question is whether some cryptos can offer this type of anti-inflationary hedge.
If inflation returns to the U.S. or Western Europe, companies will need to handle risk, manage cash flow, and determine how much to increase prices for products and services. One option is to acquire futures contracts on key materials such as fuel and other supplies.
Unfortunately, raising prices will be difficult for some businesses that offer non-essential goods. The average worker spends roughly 30% of his paycheck on rent. Which means there’s little room for food, heating and healthcare if prices do rise.
Merchants have a dilemma when deciding whether or not to adopt cryptocurrencies. They lose value long-term with fiat, but they face crypto’s volatility and risk. One thing is certain: QE is bad policy and there must be another monetary system that makes better sense.
Apollo (APL) all-in-one privacy currency combines features of mainstream cryptocurrencies in an unregulatable platform. With two-second block speed, APL is one of the fastest cryptos on Earth. “Apollonauts” use features such as encrypted messaging, smart contracts, decentralized exchange, decentralized applications and decentralized file storage.
Learn more at www.apollocurrency.com