Bitcoin adoption looks bright in Norway amid crumbling economic infrastructure

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This is an opinion editorial written by Rune Østgaard and Alexander Ellefsen, financial writers based in Norway.

While we don’t have exact numbers for bitcoin adoption globally, we do know that the global average cryptocurrency adoption rate was roughly 12% in 2022 and that bitcoin is currently around Half of the total market cap of the global cryptocurrency market, Turkey (27.1%) and Argentina (23.5%) top the 2022 adoption list, and the countries with the highest inflation have the highest adoption rates.

Norway is oil rich country 8% cryptocurrency adoption, Which is only two-thirds of the global average. Given that its population is tech-savvy, this is surprisingly low. The following factors may provide some explanation:

• Official Consumer Price Index (CPI) Number has been modest compared to most other countries.
• Norwegian politician shows negative attitude towards cryptocurrencies and as an analyst Jaron Melerud in Luxor According to reports, the government is looking to “oust” the miners.
• According to Organization for Economic Co-operation and Development (OECD)Six out of 10 Norwegians “trust” their government, which is 50% higher than the OECD country average.

But a significant weakening of the Norwegian krone (NOK) could start to incentivize more people and businesses to join the bitcoin economy.

NOK is worth Depreciated slowly but steadily since the financial crisis, And the effect of “boiling the frog” is probably the reason why it has received so little attention. it is That’s changed in the last few months, as depreciation has accelerated, at the time of writing, It takes 10.7 NOK to buy $1, from 4.9 nock in 2008, At its worst this year, the NOK devalued 10% against the US dollar and fared even worse turkish lira And One of the poorest European country’s currencyThe moldovan lei, Perhaps it helped little that Norway’s finance minister told people in early June that “Norwegian krone is a good currency,

Economists are scratching their heads as they are having trouble explaining why NOK is so unpopular, but judging by the media coverage, people and companies are becoming increasingly wary.

What’s wrong with Norway?

Loose monetary policy is probably one of the reasons NOK has performed so poorly. A small country may be able to export large amounts of oil, but it is not in a position to export inflation. In the period from 2002 to 2022, the money supply (NOK M2) grew by an average of about 7% per year. It is comparable to the USD, but it is 16% faster than the Euro, which grew an average of 5.9% per year. Although many factors affect the exchange rate, nothing good can come of letting the printing press run at high speed.

A low exchange rate makes imports more expensive, boosts the CPI number and gives the central bank an excuse to keep raising interest rates. So Norwegian citizens are now facing a triple whammy: high interest rates, high home price inflation and rapidly rising costs for the thousands of sun-deprived Norwegians who are used to traveling abroad for their holidays. When the mainstream media covers a weak Nokia, the standard theme is that the budget dictates it. People should stay within limits when going on summer holidays this year,

Corporations whose share of costs is relatively high in foreign currency, while their income is mainly in Nokia, have a particularly difficult time. Home builders, who find themselves in this category due to their increased dependence on imported materials, are hit hard. A weak currency eats into their profits, while a sharp rise in interest rates unsettles the market sales of new homes will decrease, Adjusted for population growth, sales are now at the same level as the market bottom during the Great Financial Crisis.

Also consider if you:

• Although Norway is already raising taxes have a higher tax rate and a public sector that consumes about two-thirds of GDP (66% in the pandemic year of 2020 and 61% in 2022
• A Record numbers of ultra-wealthy people are leaving Norway for lower tax countries
• Norwegians are on top now OECD ranking of debt as a proportion of disposable income per household (247%)

…then the picture looks even more grim.

It probably doesn’t help NOK that most of the state’s income from taxes on oil and gas is being transferred to the government. sovereign wealth fund, which only invests its capital outside Norway. Today, the fund makes even more twice the GDP, The result of swapping the value of petroleum resources in Norway for capital invested abroad is that the country has an increasingly smaller capital base in which to invest NOK.

It is no wonder that forex market players and the wealthiest Norwegians are worried that NOK will be nothing more than a token for tax payments in the future.

ready for bitcoin

The violent depreciation of NOK and the low adoption rate of cryptocurrencies compared to the currencies of almost all other countries make the Norwegian case special. If the NOK falls further and Norwegians invest more in bitcoin, it could indicate that the same will happen in other advanced economies with loose monetary policies.

It remains to be seen whether Norwegian citizens and corporations start lining up for consultations with Dr. Bitcoin. Given that no other solution is in sight, we believe that economic stimulus will eliminate citizens’ excessive trust in government.

This is a guest post by Rune Ostgaard and Alexander Ellefsen. The opinions expressed are solely his own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.