WHAT IS INFLATION
When there is an uncontrolled devaluation in purchasing power of a Countries currency it's termed inflation. In my normal lay man and day to day understanding, when the price of a bag of beans increases from 15,000 naira to 21,000 naira and it doesn't drop to normal within few months i term this inflation. Demand and supply of products and services has great impact on the value of currency
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WHAT IS BITCOIN
You may be thinking why i have to add this up in this content. Yes, it's important to me in my understanding and inspiration of what I needed to write about. Bitcoin from the way I've seen it is a virtual currency, which cannot be touched but it's effect in people's lives can be felt. I can also say it's a virtual cash that operates on a what is called the Blockchain on which the total and maximum supply cannot be tampered on. With this layman Understanding, something should come into the memory. When I try to compare it with what I've heard about normal physical money(Fiat) which has a printing machine kept somewhere which can be printed as at when needed.
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BITCOIN VS FIAT
Bitcoin or Cryptocurrencies in general have what we call Total Supply and Circulating Supply. Total Supply is simply the Total number of the Crypto asset in circulation while circulating supply is the total number of crypto assets in peoples hand or the amount of Cryptocurrencies in circulation. Now, looking at this, we'll understand there's a great difference between crypto and normal money (Fiat). Of which we know, our Normal money does not have a fixed maximum amount/Supply to be printed. The supply is unlimited, you can print as much fiat as possible. This creates a huge demarcation between the rich elites and the masses. With this little comparison we have a little idea on how this two works.
FACTORS DRIVING INFLATION
Typically, inflation results from an increase in production costs or an increase in demand for products and services.
One of the major factors that i can say that causes inflation is the increase in demand of certain products and services. And Before this increase occurs, there may be an increase in production costs which could also be as a result of increase in raw materials for production. All these form a circle. Basically, aside the Major factors we may know, I'll be looking at some other key factors as it affects some particular Countries in West Africa.
a. Over Population:
Some states within a country are small in population but very industrious while other states may be larger in size with huge land mass with no meaningful raw materials for production.
Some of these states with high population tend to have nothing very rewarding in equivalence to their capacity. Hence, there is no equilibrium between the low sized states and the high populated states as the results produced by these less populated states seems are not shared equally among them but being distributed to satisfy some major areas withon the high populations. So here unemployment and skilled labor is very low, and wages are rising resulting to more spending by the people. They keep multiplying which also has a direct impact on the level of consumer spending which can lead to a increased demand for products and services.
b. Bad leadership:
Inexperienced individuals who got power by appointment, with no technical know-how tend to make bad decisions. Especially when they're coming from the high populated areas with no good skills, lazy and willing to issue commands as autocratic leaders.
Equity won't be part of their leadership memos because they understand it won't always be to their favor. This creates room for marginalization and injustice. Hence, low moral for productions and high demand in products and services between the less and high populated states respectively.
c. Poor Education:
Education is one of the basic amenities a country should get. How will an improvised university without qualified and unpaid lecturers produce professional nurses and doctors in a Hospital.
It's not possible to give what you don't have. Use of techs, machines and communication is important in productivity. When there is no channel to good schools, or affordable education system, it'l lead to low and unskilled man power and hence less productivity. With high demands of such products and services, leads to increase in prices.
d. Religious Factors and war:
Different believes of people about Religion may lead to war and crises, causing panic and disaster thereby destroying raw materials used in production. When raw materials are damaged, there's an increase on its cost there by making Prices of good to go up.
e. Government Policies:
Most Policies of the government are for selfish interests. A policy of disapproving equity to giving according to how revenues are generated.
Placing heavy taxes on companies which in turn leads to Increase in high cost of companies production which leads to increase in prices and hence devaluation of purchasing power.
Solutions to Inflation
Normally what ever seems to be a problem trends to have a solution. Inflation can only be managed in some countries but it seems the more it's being managed the worst it becomes.
Countries have gone into borrowing of trillions of Dollars seeking to build up their economy, but the truth remains that it won't work. There are situations where depletions occur to a countries economy and no remedy could be remembered because it seems no solution seems to be working and i know there's only one solution to it which is a "DECENTRALIZATION SYSTEM"- THE BLOCKCHAIN.
The borrowed funds which are diverted without traces are seem openly through the Blockchain system. How all expenses are made will all appear on ledger and hence creating a free and fair system. All issues regarding fraud and mismanagement of funds will be clearly sorted out. Production of goods and services will be well targeted thereby reducing over production and cubbing waste of raw materials.
Aside Waging and Price control as a means tackling inflation, monetary policies has helped to some extent.
The main motivation behind this Content is that i have seen the works and suitable solutions the decentralized system has to offer in a messed Centralized system. The Blockchain technology (a decentralized distributed ledger on which the bitcoin was made) is going to play a solution role in inflation directly and indirectly
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Though this is a new study as it's not too popular as many don't like the decentralized system as it's coming to disrupt and open the hidden secrets behind the centralized system.
Thanks to you all for making out time to read this content and to @dobartim, you're wonderful for creating this community, to @alvinwales, i find your contents interesting and simple. I really appreciate this. My content was born out of inspiration, motivation and love for the Blockchain and Bitcoin technology.
Warm regards, @padosky.