Topic: BITCOIN AND INFLATION (Read 146 times)

The real question is why did the prices go up in first place. If it were because of unreasonable money printing policy or if it is in a debt-based economy that people keep borrowing more money to spend hence increasing the demand the prices, then the answer is always a big fat NO.

It depends on what cryptocurrency you are talking about. We have 3 types:
1. Centralized gov-coins or CBDC which is the same exact thing as fiat
2. Altcoins with unlimited supply, or altcoins with no actual utility which will lose value because of uselessness or their unlimited supply
3. Bitcoin that both has utility and a limited supply making it deflationary.

The thing about inflation is that price goes up (fiat loses value and goes down) because of the very basic supply and demand rule. They print more money > supply of money grows + demand remains the same or drops due to increasing price of everything > value of money drops.
When it comes to bitcoin you it is true that the supply is increasing but supply alone doesn't create the final value it is supply + demand and since bitcoin adoption is growing at a faster pace than the supply increase, its value goes up.

Stable coins have never been any good and this will never change.
They are tied to fiat so they are just as inflationary and terrible.
They are also issued and controlled by a centralized company that makes them Extremely risky to use.

In this post pandemic era, inflation became a common term in the countries all over the world. So what then is the term inflation? “Inflation is the mechanism for the decreasing value of a currency”. So when more money is printed than the economy needs the value of the currency reduces.

MERITS AND DEMERITS OF INFLATION
One may ask is inflation a good thing? The answer to this is “Yes” and “No” in one way and opposite. When there is hyper-inflation the price of goods and services sky rocket to the individual citizens, but on the other hand it boosts the economy. Countries that tends to have economic challenges tend to print more money to combat the economic challenges, in doing so her citizens had to face the face the pressure as the price of goods and services are increases. Making her citizens turn to cryptocurrencies to store their assets and preserve the value against high inflation and the rising cost.

INFLATION IN BITCOIN
The question now is does it mean that cryptocurrency free from inflation or will the price of cryptocurrencies just keep soaring high and high? In a brief explanation, same way the value of fiat currencies reduces when more money is printed, so it is with cryptocurrencies when it is mined and generated, the values of cryptocurrencies reduces. To control this, in every 4 years, the rate of cryptocurrency mining is reduced by halve. This mechanism is called halving. So bitcoin is not totally free from inflations but it’s controlled.

CONCLUSION
Bitcoin has been an escape from inflation but because of it’s versatile nature, investors get reluctant in investing in it, stable coins has been an alternative to the versatile nature of cryptocurrencies compared to the fiat currencies.