Topic: Bitcoin and Inflation and why bitcoin? (Read 275 times)

I had nearly 2 bitcoin in my history transaction.The transaction includes the buying and selling of crypto currency.I had earned huge bitcoin as a payment in many signature campaign.In 2017,their was huge number of bitcoin based campaign.But the mistake I had made is spend 2 bitcoin then and their.I don’t have any bitcoin in my savings wallet.I don’t know the price of bitcoin will cross the 20k dollars.But it had crossed the 65k dollars and made many billionaires because of that pump.

Bitcoin's deflationary structure is number 1 reason for me to buy it when I first learned about it. I was proven right after that and Bitcoin clearly goes up and up through time, its crashes are mainly short term issues. Bitcoin's purchasing power will always be more strong than all fiast moneys, into future. It is best to borrow money using fiat money and invest in Bitcoin, literally. You will cover your debt eventually in long run. It never changes that much. Even if markets do good, Bitcoin will do even better.

I think that the statement of Bitcoin vs Inflation Bitcoin will always win, not only because Bitcoin is deflationary, but also because other things could happen in Bitcoin, the deflationary term is something very complicated for some people who do not know much about economics, because they see it only as an affirmation against inflation, maybe yes, but it goes beyond what it is, fiat money has no limit, new bills are always being issued, and as long as that happens the value of money will fall, not bitcoin, the bitcoins that have been lost, are lost and that's it, there is no going back, and that makes them value more, whoever has 1 bitcoin will be a billionaire in the future.

@Jawhead999
Price is not linear but has cycles. Now is the down swing.
Still is the long run it is expected to rise and in average should be a good hedge.

@mindrust
For short term having useful items is wise advice, both from the price but also should there be problem with supply in some crises.
Still in the long term having too much of those items is not practical, so when looking where else to save money and invest.
For those you need scarcity, so my take is: Bitcoin, Real estate, Stocks.

The value of bitcoin will only rise as time goes on, people will realize the value of bitcoin if they don't already.
I think BTC has the potential of reaching a 5 Trillion market cap in the next 10 years.

Those 10k bitcoin pizza story is also mind boglin~

Sentiment related to inflation continues to strengthen and rage is still one of the factors that move the US and global financial markets, because the threat of inflation is certain to make the economy more real overheating, but the majority of major cryptos are turning green even though the world is experiencing inflation, Bitcoin tends to stay in the zone. psychologically, when the latest inflation was released the crypto market was only slightly affected and continued to strengthen even though the movement still tended to be limited,

Anything but the dollar...

Bitcoin is fine but it wouldn't be my first choice to protect myself against the inflation. I would rather buy durable goods which you can store for a long time like toilet and copy printer paper, paper towels, dry food, canned foods, some water, home repairing stuff (drills, screwdrivers)  or any kind of repairing stuff, back ups for your current electronic devices in use (computer parts, cameras etc), household appliances (if you have an old device, it might be wise to have a back up)

These stuff I mentioned above are the things which you most likely will need in the future.

Gold, silver, crypto you probably won't need these in your daily life. Some people will need them yes, but not you.

So you're talking if Bitcoin is hedging against inflation, isn't? then explain to me why at the current situation where inflation is really high and fiat value always decrease, Bitcoin price doesn't increase? actually Bitcoin price is decreasing too. If Bitcoin is hedging against inflation, Bitcoin price already high and would back to $50K at least. You need to understand and explain about Bitcoin and inflation rate in the current situation, not only the past history.

Here is my blog, contribution to the question Why Btc:
https://infopedia.io/revolution-of-money/

(r)Evolution of Money
(Money and Payment systems of tomorrow - Bitcoin rise with crypto industry story)

The inflation rate is rising all over the world and that's what we are all sure about it, during the last few years the food price was always increasing and the money we hold is losing its value against many other assets and even the products we needfor our lives, in the other hand the price of bitcoin in uptrend in long and mid-term and this difference between bitcoin price and the inflation rate can be very much surprising for the people who are not familiar with the market and this can be a good chance for the investors to save themselves from the inflation.

The funny thing of 2022 is that none of the traditional asset classes protected us from the rising inflation so far. Stocks were hit pretty hard and are down 30% on average, usually stocks can atleast partially withstand inflation pressure, not this time. Bonds were also a bad investment because of the rising interest rates. And even gold the number one inflation hedge back in the day is down considerably from its 1900 USD levels. Investors must have all swapped into cash, what seems as a pretty bad idea with inflation rates at 10%. With that in mind bitcoins and other crypto currencies is one of the few good ideas to protect ourselves from inflation. The price drop we saw over the last several months is giving us good entry prices to top off our holdings. I rather trust in bitcoins than in gold or silver to protect our money from inflation.

What you are trying to explain is not inflation but demand effect, so your calculation will not be accurate as the time interval is optional according to the price, you did not measure based on a specific commodity and the focus ignored many aspects, so you are comparing the importance of adoption in increasing the value of Bitcoin more than the fact that Bitcoin as tool to fight inflation.

As for the reason for bitcoin's failure at the present time, it is because of the small market capacity, we are still in the early days and we need a lot of time to rise.

The value of Bitcoin does increase over time, but you should also note that the increase in the price of Bitcoin is also based on the amount of demand in the market, so it will not always increase if one day the demand for Bitcoin decreases.

Close examples like last year and now where the price of Bitcoin is still rotating at $19K to $20K, while for the highest price last year it was $60K although the price didn't last that long for a unit of Bitcoin, but at least Bitcoin was at that price. So is that also called an increase in value over time for Bitcoin?

Diversifying assets in the high inflation and economic recession time is what I expect people would do right now. You want to put some at gold, and some USD at the bank cause of high-interest rates. The rest could be in long-term stocks from good companies.

Bitcoin can also get a fair share amount of what people put their money into diversifying above. It was really a no-brainer move here. As long as they have a stable income and no debt on their name, of course. Cause you can't afford to be leisurely at investing, to be diamond hard when things like debts, make ends meet puts pressure on you and your assets.

I think there's a need to clarify something here, bitcoin increases value over time and this is not inflation at all but retaining the quality in value with respect to time, inflation hit the fiat economy whereby the same value fiat money had over time is still what it is now, or even depreciated and that's why you discover what one USD can afford buying five years back will now requires about fifty USD in present time, but bitcoin operations is opposite to this just as OP has explained it on the diagrams, bitcoin value increases with time.

The problem is that bitcoin price is not decided based on its value but instead it is decided inside centralized exchanges. Considering the fact that the order books aren't that packed inside these exchanges (which makes the market small in comparison to others) and the fact there we have a lot of weak hands who thought bitcoin was an asset and was supposed to make them rich overnight, we can pretty much expect very volatile market where it gets dumped for no reason during times of economical crisis.

But the fact remains that bitcoin is deflationary due to its capped supply and considering that the adoption of bitcoin is constantly increasing the price should go up in the long run and we are currently behind schedule for that rise...

Up untill 1637 tulip seeds were also a great inflation hedge?


Because all you (OP) mentioned in your post is a past performance and weakness of fiats. Tulip seeds also performed great for 3 years.


I did not know that 1971 was "ancient times", when president Richard Nixon ended U.S. dollar/gold peg.

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Bitcoin is better than gold. Its easier to store, easier to transfer, easier to use, easier to divide even to cents and has better stock/flow ratio which will not change after price pump (gold supply will pump after 10x price pump because it will be profitable to mine gold from sources that were unprofitable before) . That's why it may work as good inflation hedge but not for those who bought the top. And we don't know where real long term value is. It may be at 50k$ and we are way undervalued. It may be at 1k$ and we are way overvalued.

This is sad, when people retire thinking they saved enough, then they face this kind of unfair inflation realising it’s the begging of the bad time, People don’t care how much you know until they know how much you care. We want to save as many people from financial ruin as possible.

If we're making the conclusion that bitcoin is an inflation hedge just because it performed really well, then are high growth tech stocks that performed really well(and similarly as bitcoin) throughout the years also considered an inflation hedge? I don't think so.

Yes, indeed, people perceive inflation in bitcoin subjectively, depending on their entry point, you can imagine yourself as a buyer of bitcoin in November 2021 and then you will probably consider that your funds have depreciated. However, if you look at bitcoin throughout its history, it becomes clear that it is a more inflation-resistant asset and has 1.8% annual inflation, which makes it more preferable compared to fiat money.

You are correct in focusing on the fact that BTC was worth nothing 10 years ago, and that is what needs to be taken into account when revaluing it. Most people compare the last peak value of bitcoin to the current price (which is now low) and draw conclusions from this, which I consider to be the wrong approach. From this position, it seems that bitcoin is a bad tool to fight inflation. In part, this is true if we evaluate it purely in a short period of time. But you need to scale your attention and make assessments considering the whole picture of what is happening, and not a piece of the puzzle, that is, in the long term. In this case, it immediately becomes clear that BTC does an excellent job of compensating for inflation and even more, due to the large profitability in case of holding for a long time (at least several years).

Since my introduction to bitcoin, I have been interested in this subject. I think the idea of an unregulated currency is very attractive, especially as it goes against how our economy is used to running.

For me, there are two reasons why bitcoin has the potential to succeed in the future
1) because new users want to invest and use the currency;
2) because one day it will be adopted by someone or a group of people who have a lot of money.

The first reason seems more likely because I believe that if more people start using the currency, then others will want to get in on the action although I don't expect this to happen quickly, especially in current conditions it could take a few years. one thing, I feel it's possible.

I think those people who seem to have found a weakness in Bitcoin's supposed purpose, which is to somehow avoid inflation, by pointing out that its price is also falling as inflation has gone through roof are not looking at the bigger picture. They're obviously nitpicking. And I think it is very easy to counter, if it's even worth responding to. You know, somebody points out that Bitcoin was $70,000 almost a year ago and is only $19,000 today. Look, that's not the starting point. Just a little over a decade ago, Bitcoin wasn't even a cent.

topic creator has it all entirely wrong

bitcoin was not suppose to stay at $75k. that $75k was a temporary bubble of inflation

imagine it this way

in 2021 the "value" (store of value) was $10k so while the PRICE speculatively bubbled upto $75k for just one day. that meant the store of value was  only 16%
yes the $75k was expected to correct

in 2022 the value (store of value) is was $15k
meaning the price of $19.6k is a store of value of 76%
this means when you buy bitcoin now you are locking in alot more value meaning more of your wealth is safe

bitcoin right now is a great time to buy

other assets
ethereum value is (due to pos merge) only $40
so with a speculative price of $1.3k means its store of value lock is about only 3%

gold with a $1.6k price and a $900 value is 56%

so bitcoin right now is a better store of value and deflationary asset
..
the reason why people are not buying into bitcoin right now is simple
fiat is inflating the spread of min wage vs cost of living means that holding fiat is bad. but real world products are increasing in price so people are on a product buying spree before the costs of products increases further. they are hoarding real world products. to invest against net years costs of living

once they have reached their product hoard limit... then they will invest again in assets once they have spare fiat. because yes they wont want to store value in fiat.

3BTC can buy a house in my country. maybe even 2 houses if you chose outside the city.
an early investor can look at BTC as a hedge which is really true when we zoom out.  of course for new investors it look different particularly to those who bought at the price peak.

In my country, I can buy a simple house with only 0.5 BTC. it's a bit higher in price than 2021, 0.25 BTC, so with situation I really thing on near future, with only 0.001 BTC I can buy a house, car and some expensive gadgets. I hope and begin to save my btc from signature campaign. Because USA always print the dollar always all they want.

Inflation's built into fiat currencies by the central banks which seems like a bizarre stipulation that most fiat users don't even think about. It's targeted at 2% yearly under stable currencies. Unstable currencies/economies would only dream of a 2% inflation rate. Losing 2% of your purchasing power year over year is massive, and that's in the best case scenario when the central banks can keep a balance on the economy. If they choose to ramp up the money printer, it'll reach a large multiple of 2%.

For folks that think Bitcoin's fluctuation in price is too much to handle, I'd argue that a guaranteed yearly loss on your purchasing power is worse.

Indeed, if you look at money from ancient times up to now, it is indeed much different in its purchasing power, and indeed it is different from bitcoin, bitcoin was previously low in price, and now the price has increased tremendously. so I personally totally agree if there are people who say that bitcoin is anti-inflation. because we have seen the history of bitcoin price.

We are in a time of crisis and I have to say that inflation is so high, it affects everything. A lot of people have been expecting bitcoin to exert its anti-inflation properties, and then things didn't go as expected, assets like bitcoin are not immune to short-term negative effects. I see that many people are starting to be negative and skeptical about bitcoin's ability to fight inflation.

But if we don't just look at the short term but look at the long term, looking to the future. We'll see what bitcoin can do.

+ In 2010: with 10,000BTC we will buy 2 pizzas.
+ In 2016: with 100BTC we can buy a car.
+ In 2022: with only 10BTC we will buy a house, maybe many countries will not need 10BTC to own a house, sometimes only 3BTC to 5BTC.


Just looking at these things, I can tell you that, if BTC is not the best anti-inflation asset, you won't find a second asset that is more inflation-resistant than BTC.

Let's feel for ourselves what is going on in our daily life, is this true? I believe you will have your own final answer.

source pic: https://www.facebook.com/BitcoinBlueWhale.eth/

Fiat is designed to die slowly.

source pic: https://www.facebook.com/BitcoinBlueWhale.eth/

This is always true if we zoom out and look at the history of bitcoin.


Buy bitcoins before it's too late.

https://twitter.com/BTC_Archive/status/1576954888184950785