Brazil is Splashing the Cash to Print More Infinite Cash: They Can’t Print More Bitcoins

As countries around the world begin the long journey of recovery from the effects of the COVID-19 pandemic, the Brazilian populace is preparing to welcome a new banknote.

A Reuters report suggests that the new R$ 200 note will go into circulation before the end of August, making it the highest denomination of the Brazilian reais. The note will be worth around $34 USD going by exchange rates at the time of writing this report but could only help continue a period of steep loss of value of the Brazilian reais against the USD in recent years.

What is more worrying though, about the new R$ 200 note is that its production cost will be the highest price among banknotes and coins in circulation in the country.

Until now, that record has been held by the R$ 1 currency, coin money that typically costs R$ 0.31 to put a unit of it into circulation. But, for the new R$ 200 note, the Brazilian Central Bank will reportedly spend R$ 0.325 cents per note.

Some 450 million of these notes will be printed, although they’re likely to go into circulation at different times than at once.

The primary reason provided for the need for a higher denomination of the Brazilian reais is that demand for cash rose amid the pandemic and that more citizens are hoarding money instead of spending it. The need to allow people to withdraw more money by using less paper is also being used to foreshadow the real cost of putting the new money into circulation – inflation.

Will Bitcoin fair better in Brazil?

Conditions such as the impending release of the R$ 200 note in Brazil evidently raises a debate regarding whether a currency like Bitcoin which has a known issuance cap and schedule will help citizens preserve their wealth in a better way than fiat.

For one thing, a known issuance schedule gives everyone in the society a chance to rebalance their wealth before new units go into circulation to dilute existing value. The process of generating new units is also verifiable, allowing anyone who is interested to see who owns what fraction of newly minted coins and who doesn’t.

There is also the possibility that the monetary costs attached to sending new units into circulation will be minimal since unlike fiat, only digital versions of the currency exist. The use of blockchain technology also guarantees there can be no counterfeiting of bitcoins. In Brazil, other reports already show that fake R$ 200 notes are proliferating the economy.

Although it will still take some time for Bitcoin to compete in Brazil on the global scene as a trusted currency for billions of the world’s population, the situation of fiat currencies makes the promise of that happening hugely possible.