Topic: Can Bitcoin really resist inflation? (Read 361 times)

You can consider BTC a hedge to inflation when the price goes up and it always does go up but this is still a speculative asset that goes up and down too. And there are lots of factors affecting its price to drop. Luckily, it has a limited supply which is the advantage of it because of high demands. What is needed for it to go up is for people to take their BTC out of the exchange circulation.

As for other cryptocurrencies, I really don't see them as a threat that could be a reason that Bitcoin wouldn't succeed.


Only a small minority knows about Ethereum and other cryptocurrencies in the first place.



Bitcoin's success as a hedge against inflation will really depend on if people see the importance of bitcoin or not.

It can't. Bitcoin doesn't even have a fixed price. Because the price is completely controlled by the community. It should not even be worth it. I'm sure bitcoin will be able to withstand inflation until this technology really doesn't exist. Only when the technology dies will bitcoin disappear.

Yeah people who can't read austrian economics. The ones bitcoin is pushing out, since the reality is that bitcoin supply is limited while the others are not. With non garbage money, you save and only spend when you want, you don't get a credit to invest in a project, you save to start the project.

Shocking, fractional reserve banking is a legal ponzi scheme that will collapse and the whole infinite emission and debt expansion will go with it.

well i think it cannot resist inflation because the value of bitcoin is based on the value of USD, it does not have any value on its own, so if the value of USD inflates then so does the value of bitcoin. if this does happen then the economy of bitcoin will collapse also the world economy will collapse so let us wish that the value of USD does not inflate.

Inflation means that the central bank overprints paper money in a short period of time, causing its price to drop and currency devaluation.

The scarcity of Bitcoin makes it itself anti-inflationary. It is a deflationary currency. Neither the government nor the central bank can control the amount of Bitcoin.

BTC cannot resist inflation imo. If more corporations accept crypto (esp BTC), it will become one of the major currencies.
If you want to resist inflation, try to diversify your investments to different tools e.g. cryptos, stocks, forex, trusts etc.

One of the main drivers behind bitcoin's current success is the combination of stability and flexibility offered by bitcoin, which has led some investors and the public to believe that bitcoin can be a stable hedge against US dollar inflation.
But if you see bitcoin only as a substitute for gold, then you are missing the essence of bitcoin, which is that bitcoin is more than just a hedge against inflation.

I think it is still unclear whether bitcoin is an asset that can act as a hedge against inflation or at least, not yet a deflationary asset for now, although we all know that bitcoin supply is very limited, but so far we have not come close to that limit.

Yes, you make sense. If only from the point of constant quantity, Bitcoin is deflationary, which is not rigorous. Because altcoins can also do this.

A constant total means that there is deflationary expectations. Simply, is gold deflationary or inflationary? Since mankind has regarded gold as a general equivalent until now, the production of gold has not been interrupted, and the amount of gold has been steadily increasing. Even if industrial consumption is not considered, gold will be depleted and storage accidents may occur (such as various sunken ships and treasures). So this gives deflationary expectations, but it does not mean that deflation is bound to be. Bitcoin also has this problem. Because Bitcoin holders have strong anonymity, it is difficult to count how many Bitcoins have been lost. There is a saying that 300W bitcoins are actually in an uncirculated state (the private key is forgotten, there is no backup, the hard drive is broken, etc.). This kind of Bitcoin is equivalent to the gold sunk in the Mariana Trench, so the constant amount of Bitcoin has this deflationary expectation. Suppose, every year 1% of Bitcoins are "lost" for various reasons, that is, about 16-17W BTC cannot be circulated. The current block reward is 12.5 BTC/block, which means that 65.7W BTC will be dug out every year. This number will be halved every four years, which means that the next time it will be halved, only 16.4W BTC will be produced every year. It's basically the same as the amount of "lost". At this time, the total amount of bitcoins that can actually be circulated began to decline, and deflation expectations were inevitable.

Inflation is caused by the printing of money by the central bank and is a process of devaluation of legal tender.

The supply of Bitcoin is limited, and scarce resources can withstand inflation. Moreover, its non-decentralization is not subject to arbitrary and authoritarian supervision, and it will not happen that the government increases the amount of money. Bitcoin can effectively resist inflation.

if I look at it in general terms, the direct relationship between fiat currency and bitcoin is not directly connected so that what happens to fiat will not have an impact on bitcoin or vice versa.

If fiat experiences inflation due to many factors related to fiat, of course there is a way to reduce inflation by releasing foreign exchange reserves and stocks and maybe printing money again. but for bitcoin with a value that can no longer be added then bitcoin will not be able to happen like fiat.

whether bitcoin will be able to take action to prevent inflation from happening, obviously there won't be and it's impossible, because its nature already distinguishes the possibility that it will happen is very unlikely and inflation will only occur only in fiat, not with bitcoin.

Inflation is not necessarily a problem. The primarily purpose of Bitcoin is not to be a deflationary asset such that Bitcoin gets overvalued, but for it to be a functional currency that can be used for transactions. Inflation has always been part of Bitcoin, monetary inflation in the sense that there is an increase in the supply year on year practically means that there will be some degree of inflation for at least the earlier parts of Bitcoin.

Since we relate inflation (and deflation) to the purchasing power of the currency, it doesn't necessarily mean that Bitcoin will be inflationary or deflationary because its value doesn't necessarily follow economic trends. It is just perceived to be deflationary because it has a fixed supply and the circulating supply will decrease in the future, but that isn't the primary determinant of it's value.

In the context of modern economy, inflation is good but it has to be moderate. Deflation is generally seen to be far worse and there is a reason why Japan have policies to simulate inflation.

What I mean is to judge that Bitcoin can withstand inflation only from the limited supply of 21 million Bitcoins, so that other altcoins can also do it.
Just from a constant amount, although it will not cause inflation, it may not necessarily be able to solve inflation.

Bitcoins are global currencies so they have a large and decentralized market. It is everyone in the world that controls Bitcoin with a P2P network. It is different from the FIAT currency, which is also an interesting point that Bitcoin brings.
Bitcoin does not need to reduce its supply. Bitcoin is limited in quantity, scarce through increased mining by miners and halving rewards per block every 4 years. The amount of Bitcoin outside the market is always decreasing due to the active buying of individuals and institutions.

There are few million bitcoin less because of lost coins, but there are much more Sats or mBTC that can be used as smaller denominations for Bitcoin, so you don't really have to own or buy one Bitcoin.

Bitcoin doesn't have to do anything to resist inflation.
It's a free market that will decide if people will choose Bitcoin or something else like precious metals to hedge inflation and hyperinflation.

All those are centralized junk shitcoins that can't really do anything and they can't compare with Bitcoin.
There is no CEO or central authority controlling Bitcoin like it's the case with all other coins and digital currencies.

Since when is Bitcoin hit by inflation?
because Bitcoins are not continuously minted, a fixed number certainly gives a fixed answer where Bitcoin is the safest savior from Inflation.
Due to the existence of Bitcoin as a solution for fiat currencies, we certainly believe in this. Bitcoin is independent, not centralized, no one controls its rate, not even the whales. Bitcoin is about individuals, with all the rights and freedoms they can hold at will, while Fiat is centralized and has a processed performance system under the auspices of the government.

Inflation is related to centralized economics, thus, it's the governments actions and measures that can fight inflation and not Bitcoin per se, Bitcoin is a decentralized network and what it can do is to act as a hedge against fiat inflation/devaluation, imo, it's somewhat a wrong ideology to believe that Bitcoin can fight inflation. The reason why there has been an influx of institutional investors and individuals into the Bitcoin network is cause Bitcoin can somewhat retain the value of their funds as the traditional economic system struggles, but people wrongly believe that Bitcoin can solve or stop economic inflation, that I don't think is possible.

The Bitcoin market will be the solution to a centralized economic system that creates a new problem, namely inflation.  Bitcoin which is decentralized and has high volatility will provide equal opportunities for profit or loss according to the analytical capabilities of each investor.  When you are able to read the opportunities, profits of up to hundreds of percent is a natural thing to have.  There have been many happy stories of having crypto in their portfolio.

It's a distorted narrative to say that Bitcoin is here to stop inflation or save people from inflation. Bitcoin itself doesn't have infinite inflation, so it means that theoretically as fiat currency loses its value, Bitcoin's price will go up because its supply didn't change. However, Bitcoin can't stop governments/banks from printing money, and it's not adopted enough to have observable macroeconomic effects. It's also quite volatile for now, so it's not suitable to be a store of value for everyone.

They are two completely different things. Even in the event that Bitcoin becomes a medium of exchange (currency) in the future, because today it is succeeding more as a store of value, it is normal that it coexists with other currencies. Then, if banks give loans, they will not give bitcoin loans, they will give them in other currencies, either fiat or shitcoins, and in any case they will ask you to leave Bitcoin as collateral.

Lending in the fiat system is a way of creating money out of thin air, and that cannot be done with bitcoin.


Bitcoin has been the best financial asset to protect you from inflation and will continue to be so because of its intrinsic properties, especially its limited nature, as noted above.

The reason why some types of cryptocurrencies can act as a hedge against inflation is for the same reason as gold: supply is limited. This is something that many people, even crypto players themselves, forget, but keep in mind that many cryptocurrencies and especially, Bitcoin are built with inherent limitations. All in all, it is not really clear whether Bitcoin is, in fact, a deflationary assets. Or at least, not yet a deflationary asset. While it is technically true that the supply of this cryptocurrency is limited, we are not close to that limit yet. One of the main drivers behind Bitcoin's shine is the combination of stability and flexibility it offers. In this context, it is encouraging that today investors not only see crypto as a stable hedge against US dollar inflation, but if they only see crypto as a substitute for gold, then they are missing the point: cryptocurrencies are more than just a hedge against inflation.

By the way, a very important remark, when the economy in the United States begins to shake, the country's population immediately begins to invest in cryptocurrency at my opinion, we have already noticed this more than once, perhaps the problems in the economy in this country will bring a new maximum for bitcoin ...

BTC will only resist inflation if we want it to do so. If most of us see it as a hedge against inflation, it'll be that way.

But on the other hand, I am also afraid of the existence of "virtual" Bitcoins such as bonds or what companies like PayPal/Revolut are selling: just the value of 1 BTC rather than the coin itself. I think they're going to try to introduce some kind of artificial inflation at some point to hurt Bitcoin. That remains to be seen though, and I don't think there's any "cure" for it anyway..

In Bitcoin, onchain itself, If from the standpoint of limiting the number of coins within the protocol itself, then YES. That’s obvious. Unless a hard fork to increase the supply cap gets consensus.

I’m also confused, OP. Are you talking about Bitcoin derivatives as instruments for inflation?

Bitcoin hasn't been alone on the market for many years, and yet its value is constantly increasing. I believe it's a good sign that altcoins don't pose a serious threat to Bitcoin and that Bitcoin can resist inflation successfully. It's not only about the limited total supply, but also about the limitations set by halvings. If anything, the problem Bitcoin as money might face is not hyperinflation at all, but reluctance of people who don't want to spend it on goods, knowing that its purchasing power can increase a lot in the future.

Every scarce resource or scarce financial asset is protected against inflation.
Inflation is the process of devaluation of fiat money.Scarce resources are protected against inflation,simply because their price measured in fiat money is going to increase,which means that fiat money are becoming less valuable,compared to a scarce asset like Bitcoin.


So you think that altcoins will somehow undermine or break the "protective power" of Bitcoin?Why?
Altcoins are altcoins and Bitcoin is Bitcoin.Most of the altcoins,which aren't scarce will lose their value slowly,some of them will keep their value,which is measured in fiat money and this means that they cannot resist inflation.
Bitcoin has nothing to do with this.

Bitcoin's success as a hedge against inflation will really depend on if people see the importance of bitcoin or not. As for other cryptocurrencies, I really don't see them as a threat that could be a reason that Bitcoin wouldn't succeed. Only a small minority knows about Ethereum and other cryptocurrencies in the first place.

To answer the title, yes it can resist inflation because it keeps up with it, remember that the world is experiencing inflation every year so we can witness that bitcoin can and does resist inflation. Plus, what's the point of bitcoin being decentralized when it can't even resist inflation.

This analogy is very apt.Suddenly I understood that replicas are always replicas, and Bitcoin is always Bitcoin.
But I guess OP wants to express bitcoin derivatives, not replicas.

If I draw Franklin's face on a piece of paper that doesn't become a 100 dollar bill. It would be a useless piece of paper.
That's the same with altcoins, when a shitcoin copies bitcoin it doesn't affect bitcoin's supply or the fact that it is deflationary. It would simply be considered a weak copy.
Same thing is true if some day banks and other institutes start giving out "fake" bitcoin's through loans, etc. It won't affect bitcoin itself.

Bitcoin has a monetary deflation because it doesn't compensate for the lost coins and there should be an overall monetary deflation, year on year despite the steady inflation due to the increase in the supply. That would depend on how much of the Bitcoin gets removed from the supply. Eventually, Bitcoin will be deflationary, because the supply increase is zero.

Since Bitcoin's maximum supply cap and it's reward schedules are pre-determined from the start, you cannot change the rate of monetary inflation (or deflation) unless everyone agrees on it. Don't take into account the actual value of Bitcoin, because there is no way to predict whether it gets more valuable or vice-versa.

Now the impact of the U.S. epidemic has forced the Federal Reserve and the U.S. Department of the Treasury to jointly change the U.S. macroeconomic policy over the past four decades. The crazy rescue plan of the Trump team and the Biden administration has led to a huge crisis in the credit of the U.S. dollar, which is raised by money printing and debt issuance. The U.S. bailout fund has brought inflation.

At this time, people again mentioned that Bitcoin can fight inflation.

Since the total issuance of Bitcoin is limited to 21 million, Bitcoin has had its own "anti-inflation" aura since its inception.

However, Can Bitcoin really resist inflation?

Because, although Bitcoin has a total issuance limit as a "protective cover" against inflation, but under the impact of a dazzling variety of virtual currencies such as ETH, BNB, XRP, LTC, DOGE, etc., Bitcoin's "protective cover" "It's easy to break the power.

The main determinant of currency issuance in the modern economy is not how many physical banknotes are printed by the banknote printing plant, but how much credit the bank issues. If the amount of credit is too large, it will lead to inflation. To prevent inflation, the number of entities that control the base currency is ineffective.

The key is to control the floodgate of credit. Imagine that if Bitcoin really becomes currency, Bitcoin bank loans and Bitcoin bonds will certainly follow.  Can inflation in the Bitcoin world be controlled simply by limiting the number of Bitcoins?

The central bank's quantitative easing policy and the ever-expanding money supply are in stark contrast to the quantitative tightening policy of Bitcoin's third halving. The supply of fiat currencies is growing rapidly, and claims about the scarcity of Bitcoin are becoming more and more important. Can this prove that Bitcoin can resist inflation?I am confused.