Bitcoin Is not an inflation hedge in first place

Ozero

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Quote from: mk4 on July 02, 2022, 08:29:42 AM

It's simply because it's too early for it to become an inflation hedge. There's a potential for bitcoin to be an actual inflation hedge once adoption is high enough to the point that it will be difficult for it to have price spikes in both directions.

People should be saying "bitcoin could potentially be a good inflation hedge in the future" rather than "bitcoin is an inflation hedge". The latter being false, at least as of today.

The fact that bitcoin will cease to show high volatility with its further great acceptance by people is only one of the versions. No one knows how the price of bitcoin will behave in the future. I believe that high volatility will remain with bitcoin for any adoption. That people will always make conflicting decisions about buying and selling bitcoin at a time when there will be a lot more use of bitcoin may not work. Therefore, bitcoin can already work as a protection against inflation.

Abiky

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Quote from: Codswallop on July 29, 2022, 02:46:40 AM

Bitcoin was not designed to be a hedge against inflation, but the concept has gradually evolved due to its limited supply. When we compare available currencies, we only have fiat and Bitcoin. And, because fiat is unlimited and rapidly losing purchasing power, it is natural for people to seek refuge in Bitcoin and feel confident that their Bitcoin money will not lose purchasing power over time because no one can add more supply of it.

Bitcoin's purpose has been changed over the years because of its limited supply. It was designed to be "Peer-to-Peer Electronic Cash", but it's rather used as an electronic store of value by the masses. You can see how prices fluctuate constantly due to the speculative nature of the market. With this pace, Bitcoin will never be used as an alternative currency to existing Fiat. This would only change if Fiat is no longer used as the standard unit of account. If people began using Bitcoin regardless of its market price, everything would be different.

At least, the Blockchain is alive and healthy as ever. As long as decentralization is prioritized, Bitcoin will last a lifetime. Just my thoughts Grin

amishmanish

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Bitcoin is certainly getting affected by the market forces which as it has become a part of conventional economics and Yes it is a great investment for future. Bitcoin has advantage of being the first and strongest crypto currency. As the blockchain economy is currently booming, even during Covid there was tremendous growth of blockchain and bitcoin. So in long term term we can expect bitcoin to fare better in future. It will remain strong and keep of growing bigger with time, If this effectively mean being a inflation hedge, than yes it is an inflation hedge. Else economists have a better say.

nullius

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Quote from: Cryptornd on July 02, 2022, 05:42:34 AM

Bitcoin was never supposed to be an inflation hedge in the first place. That was an idea built by influencers and speculators in the last years.

Wrong. It’s sad when people who don’t understand Bitcoin try to explain it to those who have been in it for much longer. It is repulsive to see one of Bitcoin’s founding principles smeared as “an idea built by influencers and speculators in the last years”.

Quote from: satoshi on July 06, 2010, 01:32:35 PM

Escape the arbitrary inflation risk of centrally managed currencies! Bitcoin's total circulation is limited to 21 million coins.

I am not citing Satoshi as an authority, but rather, to rebut the ridiculous misinformation that Bitcoin’s anti-inflationary quality was “an idea built by influencers and speculators in the last years.” That is wrong in fact. Not a matter of opinion.

Quote from: Cryptornd on July 02, 2022, 05:42:34 AM

What Bitcoin was supposed to be and is now becoming is a P2p uncontrollable payment network across the globe.

That, too. So...?

Why am I wasting my time tossing out correct information to be buried in a spam megathread? Sigh...

Edit: Problem fixed:
https://bitcointalksearch.org/topic/bitcoin-is-an-inflation-hedge-in-first-place-satoshi-expressly-made-it-so-5408084

bestcoins1

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Quote from: Codswallop on July 29, 2022, 02:46:40 AM

Bitcoin was not designed to be a hedge against inflation, but the concept has gradually evolved due to its limited supply. When we compare available currencies, we only have fiat and Bitcoin. And, because fiat is unlimited and rapidly losing purchasing power, it is natural for people to seek refuge in Bitcoin and feel confident that their Bitcoin money will not lose purchasing power over time because no one can add more supply of it.

Bitcoin's purchasing power will not be lost and can still be relied on as a very valuable asset at this time. But if someone buys Bitcoin to protect the value of his assets, I think it still has a risk because Bitcoin is not a stable currency in the market so someone is still better to choose stablecoins if he just wants to protect the value of the asset that is fixed and will not experience loss.

Natalim

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People have different opinions about Bitcoin like manipulated market, scam, Ponzi scheme, a sort of investment, and currency. And having to listen to people talking about Bitcoin, the more it gains interest and curiosity in the community making them as well to try. Now, it was to realize that some people are talking right while the majority had misconceptions, and misunderstandings about its behavior.

Apparently, it was the choice of the people to invest in Bitcoin, and not the thing to blame when there is a decrease in the potential value of fiat money, IMO.

Codswallop

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Bitcoin was not designed to be a hedge against inflation, but the concept has gradually evolved due to its limited supply. When we compare available currencies, we only have fiat and Bitcoin. And, because fiat is unlimited and rapidly losing purchasing power, it is natural for people to seek refuge in Bitcoin and feel confident that their Bitcoin money will not lose purchasing power over time because no one can add more supply of it.

Abiky

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Quote from: NotATether on July 20, 2022, 12:00:45 AM

It seems that they have confused "inflation-resistant" to "inflation hedge", they are very different concepts.

One is something whose value should be relatively stable with respect to other governments' changes in interest rates, the second is some kind of stock you can always count on going up when inflation drags the rest of the markets down. Those people should buy Google or Amazon stock instead.

Most people need to do their own research to understand what Bitcoin is truly about. The general public has a wrong mindset, believing Bitcoin is a "get rick quick" scheme. But we Bitcoiners know that is not the case. BTC's price always rebounds after a prolonged bear market. One thing for sure is that the cryptocurrency is a lot more valuable today than what it was a decade ago. Imagine how high BTC will go another decade from now. Buying Bitcoin now would be the wisest decision to make. I'd say Bitcoin is the perfect inflation hedge. Who knows if it ends up replacing Gold in the future? Just my thoughts Grin

NotATether

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Quote from: Cryptornd on July 02, 2022, 05:42:34 AM

Bitcoin was never supposed to be an inflation hedge in the first place. That was an idea built by influencers and speculators in the last years. What Bitcoin was supposed to be and is now becoming is a P2p uncontrollable payment network across the globe.

It seems that they have confused "inflation-resistant" to "inflation hedge", they are very different concepts.

One is something whose value should be relatively stable with respect to other governments' changes in interest rates, the second is some kind of stock you can always count on going up when inflation drags the rest of the markets down. Those people should buy Google or Amazon stock instead.

Abiky

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Quote from: Fivestar4everMVP on July 09, 2022, 08:44:06 PM

Sorry to disagree with you on this matter specifically, Bitcoin has a very limited supply which i believe we all know, it is not important that Satoshi mention everything that Bitcoin is today in the whitepaper, circumstances or performance of a thing sometimes creates new uses for it, Satoshi might not have thought Bitcoin to be a hedge against inflation, but the limited supply, scarcity level, demand and its performance has made people see it as a hedge against inflation.
To give you an instance or example , Ten years ago, maybe with $2000 USD fiat money could afford you a certain type of car, lets use Toyota camry as an example, and you will up to 1000 Bitcoins to buy the same car, But today, you need $4000 USD or more in fiat money to buy the same car due to inflation, while with just 0.5 Bitcoin, you could buy two of that same car.
I hope this makes you see how Bitcoin truly is a hedge against inflation.

Long-term speaking, Bitcoin is the best inflation hedge in the world. It's just that people often see Bitcoin as a "get rich quick" scheme than a serious investment. Compared to Gold, I'd say Bitcoin is ten times better. It's decentralized, portable, with a predictable and finite supply of no more than 21m coins. For something that was worth less than a cent, I'd say Bitcoin has achieved a lot over the years. I'm pretty sure Bitcoin will reach $1m soon. The market is still bearish, so it would be best to accumulate more coins at a discount before it's too late. Just my thoughts Grin

Fivestar4everMVP

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Quote from: Cryptornd on July 02, 2022, 05:42:34 AM

Bitcoin was never supposed to be an inflation hedge in the first place.

Sorry to disagree with you on this matter specifically, Bitcoin has a very limited supply which i believe we all know, it is not important that Satoshi mention everything that Bitcoin is today in the whitepaper, circumstances or performance of a thing sometimes creates new uses for it, Satoshi might not have thought Bitcoin to be a hedge against inflation, but the limited supply, scarcity level, demand and its performance has made people see it as a hedge against inflation.
To give you an instance or example , Ten years ago, maybe with $2000 USD fiat money could afford you a certain type of car, lets use Toyota camry as an example, and you will up to 1000 Bitcoins to buy the same car, But today, you need $4000 USD or more in fiat money to buy the same car due to inflation, while with just 0.5 Bitcoin, you could buy two of that same car.
I hope this makes you see how Bitcoin truly is a hedge against inflation.

Abiky

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Quote from: darkangel11 on July 06, 2022, 03:52:42 PM

I'd argue with all of you who nod their heads in approval of OP's statement. Bitcoin is an inflation hedge because by holding it you're literally gaining value over the years.
Looking back the lows of bitcoin have always been higher year to year and the 2 year average price is always higher.

Pick any moment and think about doing the most basic thing. Buy bitcoin when it's close to its 200 WMA and every time you did that in the 12 years that Bitcoin is with us, you hedged against inflation even if you're a citizen of a country with low inflation like Switzerland. Even at times when we went below the 200 WMA you were maybe at a 10% loss for a while, which is similar to what you'd be if you held fiat money in a safe for 2 years.

If you see it that way, then yes, Bitcoin is still an inflation hedge. It's just that people are focused on Bitcoin as a short-term investment, because they want to get rich quick. Besides, prices are volatile because Bitcoin is traded against Fiat. The whole world is still depending on the Fiat standard, so it's going to take a while before Bitcoin becomes a global unit of account. I'd buy as much Bitcoin during the bear market as possible to save it for the future.

From time to time, BTC has shown to reach higher market prices due to added scarcity and ever-increasing demand. We might never see BTC valued at $19k - $21k after the next halving. Who knows if investing now will turn us into Bitcoin millionaires within the not-so-distant future? Just my opinion

darkangel11

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I'd argue with all of you who nod their heads in approval of OP's statement. Bitcoin is an inflation hedge because by holding it you're literally gaining value over the years.
Looking back the lows of bitcoin have always been higher year to year and the 2 year average price is always higher.

Pick any moment and think about doing the most basic thing. Buy bitcoin when it's close to its 200 WMA and every time you did that in the 12 years that Bitcoin is with us, you hedged against inflation even if you're a citizen of a country with low inflation like Switzerland. Even at times when we went below the 200 WMA you were maybe at a 10% loss for a while, which is similar to what you'd be if you held fiat money in a safe for 2 years.

livingfree

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It's not just in the West where bitcoin is being used as an investment. You can find it almost in every parts of the world that everyone uses it as an investment.

Yeah, it may not be intended to be as an investment when it was invented by satoshi. But that's how it goes right now, I think he has foreseen this happening because of its value as a volatile currency.

Is it a problem if it's not used as what it is intended for? No. Bitcoin is freedom and we choose what we want to do with it.

jaberwock

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Quote from: TheNineClub on July 04, 2022, 10:25:04 AM

Finally, someone pointed out what the initial use and idea of BTC was. The laser-eyed when Lambo idiots are giving BTC and crypto a bad name. And it just makes it look like it's a Ponzi. And not to mention the unnecessary forcing of mass adoption just so people can see their portfolio rocket to the stratosphere. This is going to shit really fast...

No this wasn't the first person who pointed this out. I too pointed this out before on one of my replies when someone is blaming btc because they think it was a hedge to inflation. I don't think the two groups that you mentioned there are giving a bad name to crypto. They don't say anything bad but what they only do is help the adoption grow by encouraging the masses to invest in bitcoin.

It's still up to those people that hear it if they will believe on it. It's their own responsibility whatever happens to their money. If there's anyone here that discredits bitcoin then they are those who are against to it. They spread lies making those who have no knowledge in btc believe that btc was a negative coin.

Clochaard

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The main reason why bitcoin is not an inflation hedge anymore as they used to be is because of the fact that many financial systems have started to accept Bitcoin.
Bitcoin ETFs, futures, and options are available and many big institutes are accepting bitcoin which is increasing the correlation between the Bitcoin and other traditional financial institutes.

Wind_FURY

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Quote from: DooMAD on July 04, 2022, 07:14:33 AM

Quote from: Abiky on July 03, 2022, 08:15:12 PM

Bitcoin is still in its infancy.

I feel like we have to re-frame that argument a little. Critics are using it to belittle the community. They say things like "No one would describe 'Windows 7' as still being in its infancy". They kinda have a point. Bitcoin's technology is a battle-hardened, grizzled warrior by this point, although it still receives frequent upgrades. It's no longer a nascent project, and by describing it as such, we're selling it short.

Perhaps we need to say something along the lines of "Bitcoin acceptance is still maturing, but the technology is robust"?

//EDIT: Actually, this is better suited to a new topic to avoid derailing this one.

Debatable to say if Bitcoin is in its infancy or not from both sides of the debate. Comparing it to an argument, "Windows 7 is NOT in its infancy" doesn't make the argument "Bitcoin is still in its infancy" a wrong one. Both of them are different technologies solving different types of problems. Bitcoin is probably more comparable to early days internet during the 1970s. But the UNDERSTANDING of what Bitcoin is is definitely in its infancy.

aawalker

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Quote from: TheNineClub on July 04, 2022, 10:25:04 AM

Quote from: Cryptornd on July 02, 2022, 05:42:34 AM

Bitcoin was never supposed to be an inflation hedge in the first place. That was an idea built by influencers and speculators in the last years. What Bitcoin was supposed to be and is now becoming is a P2p uncontrollable payment network across the globe.
West world uses it as an investment. Poor countries use it as money, as it was designed. The Lightning Network is dealing with the scaling problem BTC was facing mainly since 2016/17 though it processed slowly far today. countries adopt it you can see clearly ( El- salvador )

The lightning network is the solution to the money problem & scalability problem which world is being faced at the moment. Bitcoin is the solution to the money problems not mainly to the inflation problem.

YES! Finally, someone pointed out what the initial use and idea of BTC was. The laser-eyed when Lambo idiots are giving BTC and crypto a bad name. And it just makes it look like it's a Ponzi. And not to mention the unnecessary forcing of mass adoption just so people can see their portfolio rocket to the stratosphere. This is going to shit really fast...

P2P electronic payments for developing countries with unstable fiat currencies is a good use case for BTC. But for the developed world, and the majority of people in the world, BTC is better suited as a frictionless reserve currency, or a store of value than anything else. VISA already solved the scaling problem without the need of any L2 solution. Plus, BTC's depreciative nature disincentivizes its use as currency and incentivizes HODLing.
It's okay for BTC to deviate from the founder's original goal, things change.

aawalker

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If Bitcoin is a hedge against inflation, then why does its price plummet when the Fed announced high interest rates?
Clearly at the current moment it is not a hedge--it is primally an asset in the same way a stock is, and its used as a speculative investment--that's why its price is highly correlated with the stock market. Could this change in the future? Maybe. But what would prompt that?

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Quote from: mk4 on July 02, 2022, 08:29:42 AM

People should be saying "bitcoin could potentially be a good inflation hedge in the future" rather than "bitcoin is an inflation hedge". The latter being false, at least as of today.

I agree with you, and here are a few things that support that statement in my opinion:
Unlike fiat currencies, bitcoins are: - Source

Predictable and limited in supply
Not controlled by a central authority (such as The United States Federal Reserve)
Not debt-based

So it may be true that there is good potential to expect bitcoin to be a good inflation hedge in the future regardless of the circumstances that favor it. The limited supply and the absence of a controlling authority will very likely allow bitcoin to be a good choice to become one of the future hedging assets.

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