This is an editorial written by Ron Ostgaard and Alexander Ellefsen, two financial writers based in Norway.
Although we don’t have exact numbers on Bitcoin adoption globally, we do know that the average global cryptocurrency adoption rate has been estimated at about 12% in 2022 and this bitcoin currently has approx Half of the total market cap of the global cryptocurrency market. Turkey (27.1%) and Argentina (23.5%) topped the 2022 adoption list, and the countries with the largest inflation appear to have the highest adoption rates.
The oil-rich country of Norway 8% adopting cryptocurrency, Which is only two-thirds of the global average. Given that its residents are fairly tech savvy, this is surprisingly low. The following factors may provide some explanation:
- Official Consumer Price Index (CPI) numbers It was modest compared to most other countries.
- Norwegian politicians show a negative attitude towards cryptocurrency and as an analyst Jarran Melrod in Luxor Reports, the government wants to “smoke” the miners.
- According to the Organization for Economic Co-operation and Development (OECD)Six out of 10 Norwegians “trust” their government, which is 50% more than the average for an OECD country.
But significant weakness in the Norwegian krone (NOK) may start to motivate more people and companies to join the bitcoin economy.
Its NOK value Its value has slowly but surely declined since the financial crisis, and the “boil frog” effect may be the reason for the lack of focus on it. This has Change in the past few months, as consumption has gained momentum. At the time of this writing, It takes 10.7 NOK to buy 1 dollar, up from 4.9 NOK in 2008. At Its Worst This Year, The Norwegian Krone Is Down 10% Against The US Dollar And It Has Even Performed Worse Than The Dollar Turkish lira And One of the poorest European countries currencythe me moldova. The Norwegian Finance Minister probably told people at the beginning of June that “The Norwegian krone is a good currency. “
Economists are scratching their heads as they try their best to explain why NOK is so unpopular, but based on the media coverage, people and companies are becoming increasingly wary.
What is wrong with Norway?
Loose monetary policy may be one reason for the NOK’s poor performance. A small country may be able to export large amounts of oil, but it is not in a position to export inflation. From 2002 to 2022, the money supply (NOK M2) increased at an average annual rate of approximately 7%. This is on par with the US dollar, but 16% faster than the euro, which has been growing at 5.9% annually. While many factors affect the exchange rate, nothing good can come from letting the printing press run at high speed.
A lower exchange rate makes imports more expensive, fuels consumer price index numbers, and gives the central bank an excuse to keep raising interest rates. Therefore, Norwegian citizens are now subjected to a triple blow: high interest rates, high local price inflation and a sharp increase in costs for thousands of sun-deprived Norwegians who are accustomed to going abroad for their holidays. When the mainstream media covers a weak NOK, the standard theme is that budgets dictate it People should stay within the limits when they go on summer vacation this year.
Companies that have a relatively high share of their costs in foreign currency while their income is mainly in NOK are having a particularly hard time. Home builders, who find themselves in this category due to the increasing reliance on imported materials, are at a great disadvantage. A weak currency eats away at its earnings, while sharp increases in interest rates cause the market to do so New home sales decline. Adjusted for population growth, sales are now at the same levels they were when the market bottomed out during the Great Financial Crisis.
If you are also considering:
- The government continues to raise taxes even though Norway already It has a high tax rate The public sector consumes about two-thirds of the gross domestic product (GDP).66% in the year of the pandemic 2020 and 61% in 2022)
- a A record number of the super-rich are leaving Norway for low-tax countries
- The Norwegians are now leading The Organization for Economic Co-operation and Development classifies debt as a measure of disposable income per household (247%)
…then the picture looks increasingly bleak.
NOK probably does not help transfer most of the country’s income from taxes on oil and gas to the government sovereign wealth fund, which invests its capital outside Norway only. Today, the fund makes up more than double the gross domestic product. The result of exchanging the value of Norway’s petroleum resources for capital invested abroad is that the country gets an increasingly smaller capital base in which NOK can be invested.
No wonder foreign exchange market players and the richest Norwegians worry that in the future the Norwegian krone will turn into a mere token for tax payments.
Preparing for bitcoin
The violent depreciation of the Norwegian krone compared to the currencies of almost all other countries and the low rate of adoption of cryptocurrencies makes the Norwegian case special. If the Norwegian krone falls further and Norwegians invest more in bitcoin, this could indicate that the same will happen in other advanced economies with loose monetary policies.
It remains to be seen if Norwegian citizens and companies start lining up to consult Dr. Bitcoin. Given that there is no other remedy on the horizon, we believe that economic incentives will outweigh citizens’ exaggerated trust in government.
This is a guest post by Rune Østgård and Alexander Ellefsen. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.