Though financial instability and inflation are issues across the world at the moment, under-resourced communities in the global south remain the most at risk of hyper-inflation and privation. For citizens in these vulnerable communities, trading ‘Fiat’ currency for cryptocurrency assets can provide a level of security, as well as hedge against sudden economic bubbles and collapses.
Finding a reputable broker with Fiat and crypto trading instruments could be the first step in building a foundation of financial security that helps under-resourced communities and individuals to flourish. Of course, like all trading and investing, cryptocurrencies and Fiat currencies are subject to fluctuations and volatility. Thus, being informed is key.
Stability: Fiat Vs. Crypto Currencies
A ‘Fiat’ currency is a currency that is not pegged against a physical resource, such as gold or silver. Because Fiat currencies are not tied to a commodity, their value is determined by the stability of their central authorities.
A country using a Fiat currency will find that the value of that currency rises and falls with the general trust in its government, banking system, and economy. The truth is that most global currencies are Fiat currencies (including GBP and USD).
While these currencies are commonly stable in ‘developed’ nations with relatively stable political climates and economies, this form of currency can lead to trouble where there is upheaval. As a result, many nations in the global south (such as Venezuela and Algeria) have dealt with hyperinflation and economic disasters as a result of politics, conflicts, natural disasters and other instabilities.
For citizens of countries in the global south, investing outside of their local economy is the best way to hedge against economic instability.
A cryptocurrency, by contrast, is a decentralized, online currency largely created and managed via blockchain technology. This decentralized nature means that cryptocurrencies are not pegged to the performance and stability of any one country. That makes them more stable than certain Fiat currencies by default.
With Bitcoin, however, there is another stabilizing feature. Bitcoin has a fixed supply of 21,000,000 units, making it scarcer than gold. This scarcity provides stability and raises its value above even the level of other popular cryptocurrencies.
For citizens in under-resourced or unstable communities in the global south, this stability and scarcity could be the building block of financial security. Furthermore, the decentralized nature of cryptocurrency offers anonymity and privacy that Fiat currencies cannot. This is particularly useful for those living in restrictive or oppressive environments.
How to Find a Good Broker
While trading Fiat for cryptocurrencies could provide security and profit for those in the global south, there are still risks to such an investment. Finding a reputable broker with Fiat & crypto trading instruments should be the first step in any journey alongside the creation of a secure cryptocurrency wallet.
When looking for a broker, consider where they are based, whether they are affiliated with any regulatory bodies, how long they have been in business, and their facilities, as well as any unique assets and features they have. Where a brokerage is based impacts its regulatory standing. For example, brokerages based in the USA and Hong Kong have stricter liquidity requirements than many EU brokerages.
Beyond reputation and liquidity, finding a good broker is about considering your needs and goals. For example, some brokers have lower spread and restrictive leverage ratios, or lower deposit thresholds. Accepted funding methods also change from brokerage to brokerage. All of these factors come into play. Nonetheless, fiat and crypto trading could empower citizens of the global south and hedge against local instabilities and financial stresses.
