Hyperinflation is an extremely rapid price increase in an economy, typically defined as >50% monthly inflation, caused by runaway money supply growth and loss of currency trust.
Hyperinflation occurs when a currency rapidly loses purchasing power due to excessive money creation, collapsing confidence, and velocity feedback loops. Prices soar, wages lag, and the economy may dollarize or adopt alternative stores of value, including cryptocurrencies.
"Historically, Weimar Germany and Zimbabwe experienced hyperinflation, leading citizens to seek hard assets."
"In episodes of high inflation, some communities adopt Bitcoin Cash for payments to avoid rapid local currency devaluation."
Drivers include fiscal crises, monetized deficits, loss of central bank independence, and breakdowns in tax collection. Once expectations de-anchor, money velocity accelerates and price-setting becomes chaotic.
"When deficits are financed by printing money, expectations of future issuance can trigger a self-reinforcing spiral."
"Capital controls and price freezes often fail, pushing economic activity into informal markets or alternative currencies."
Stabilization often requires credible monetary reform, fiscal consolidation, and sometimes currency redenomination or adoption of a harder standard. Digital assets with predictable issuance policies can serve as parallel stores of value when local currency trust erodes.
"Dollarization or commodity pegs can stop hyperinflation if accompanied by credible policy changes."
"Households may keep emergency savings in cryptocurrencies to preserve purchasing power during extreme inflation."
All terms and definitions may update as the Cryptionary improves.