Topic: Could the rise and popularity of cryptocurrencies be a vivid example? (Read 289 times)

In fact, Bitcoin is somewhat resistant to inflation because there of the limited supply. Your points are well taken; we may be able to avoid one kind of inflation, but there are still others that are waiting to happen. People who hold a lot of Bitcoin ("whales", of course) run the risk of  manipulating Bitcoin, similar to what global banks have been doing with fiat currencies.

But the decentralized nature of Bitcoin provides a layer of protection against this. Control isnt centralised like in standard banking systems. Even though whales have a lot of money, the real power is still with the community, with users like you and me. There is a real risk that a few people will gain too much power and control Bitcoin, but its important to stay true to the decentralisation principles that Bitcoin was created on.

When the Covid 19 pandemic occurred several years ago, the price of Bitcoin really fell, but now the price has gone up again (imagine if you bought some Bitcoin at that time then now the value of your money has increased sharply), The limited number of bitcoins really makes it even more attractive for investors to protect their wealth from fiat currency inflation and not only that, the decentralized nature of bitcoin also makes investors confident that buying bitcoin will never make them lose money. by increasing demand for bitcoin (while the amount remains constant) then we will definitely see bitcoin make another new ATH.

The fact that the overall amount of money is limited makes btc resistant to inflation. However, only ne type of inflation can be avoided with this feature. Btc is prone to some other types of inflation, first of all, there is a risk that some whales will turn into "global banks", which would regulate the value of btc. The amount of crypto collected by whales can be so large that a small group of whales would have much more money than the rest of the world... Thats exactly what we can see in dollar financial system now: global banks and richest tycoons are able to control inflation rate just by managing their assets, in this case the overall money amount remains the same, while fiat money values can change dramatically.

That's the exact point. Bitcoin is so popular and in demand, because it was the very first cryptocurrency in the world and other cryptocurrencies were created following its success and rising popularity back in the day, and the whole thing is that it has had a very high demand for a very long time and that is the reason why it has such a high value, otherwise, any coin with a limited supply could become another Bitcoin but the demand can't match Bitcoin's demand.

Almost all the cryptocurrencies that were ever created basically aimed to become as good and famous as Bitcoin but they will always be alternative coins because Bitcoin is one and it's unique and that uniqueness is not only because it is completely decentralized but also because all other cryptocurrencies other than it are altcoins since Bitcoin was created before them all.

That is what I expect from Bitcoin on long term. While we see our local fiat currencies losing purchasing power within time, Bitcoin keeps rising and gaining more value, as more people become adopters and supply becomes scarcer at the market. Once more people see Bitcoin working against inflation, they will also want to have access to it, maximizing BTC's potential even more. However, this process takes a long length to happen for real. Global economy still has to crash a little more until people get aware about the necessity of acquiring an asset like Bitcoin as soon as possible.

Obviously, if there is no limit as to the availability of a particular thing, it could become less valuable. That's exactly what affects some cryptocurrency too; if the supply is limitless and the investors are quite small, it'll therefore reduce the worth of the coin. As for how fiat money is also losing value, it's as a result of the fiat money being excessively printed. With that, the purchasing power of those currencies depreciates, which can combat inflation. Like you said, Bitcoin has a limited supply that is caped at 21 million, and every day the demand for Bitcoin is continually arising with just a limited supply, which means that the value of Bitcoin will definitely appreciate rather than depreciate and be affected by inflation.

OP, your thread doesn't match the question you are asking in your thread title.
A vivid example for what? Cryptocurrencies could be used as a protection against inflation? No. I don't believe that most cryptocurrencies can offer a solid protection against inflation. Bitcoin could serve as a hedge against inflation in the long term, but it definitely doesn't provide any protection against inflation in the short term. The limited 21 million supply isn't the only factor, which helps BTC to preserve high value.
Many shitcoins can also have a limited total supply. What makes Bitcoin stand out is the secure blockchain and the amount of trust among the people. There is an army of Bitcoin HODLers, who keep their BTC expecting the price to go up. They are a major factor in preserving the current price of Bitcoin.

When you say crypto that can protect our funds from the inflation, I guess you mean Bitcoin and since you've also posted on this section that's probably what it is.

But if you're saying that it's the entire crypto market that are what people thinking of protecting their money from inflation. You can't generalize that because with thousands of them in existence.

We all know that most of them are just shitcoins and not gonna add any value to your funds and will even decrease it because many of these are low in liquidity.

Not all cryptocurrency can protect against inflation. One good thing about bitcoin is that it dosent follow the fiat system pattern which is one of the reason it can serve protective purpose when inflation occurs. Bitcoin decentralization makes it different and stand out as the king among other cryptocurrency especially the fact that bitcoin supply is capped with increasing demand unlike other coins that can mint at any times.

We are not there yet, Bitcoin is not perfect. Yes, Bitcoin having a limited supply makes it an anti-inflation currency. But if you try to store your everything in it, you will face volatility. In some cases, you will not be able to use it completely. Why? because of the huge price dump. It could make it impossible to use your BTC when you need it. If you do, you will be at a huge loss. This scenario is not uncommon. History repeats itself.

We have taken BTC to a point where we don't see it as a P2P online transaction method. We have made it an investment asset. If you have the mindset of 1 BTC = 1 BTC and you are not bothered to use your BTC when its price will drop, then you can choose it. It will be the best option in any case. But if not, then it's still not the perfect solution. We will have to wait a long time before we can see stability in the market.

Im interested in your basic Bitcoin inflation hedging thesis. Bitcoin's regulated supply sets it apart from fiat currencies, which may be issued indefinitely and cause inflation.

Its value depends on more than Bitcoin's finite supply. Demand, like weather, is huge and unpredictable. By rising in value, it may defend against inflation, but what about when it plummets? Never disregard this asset's significant volatility.

To diversify your investments, incorporate Bitcoin or other cryptocurrencies, but relying only on them could be like putting all your eggs in an unstable basket. Let's diversify our finances and be open to new ideas, okay?

Investing in cryptocurrency is not what saves you from inflation, but investing in Bitcoin to be precise is what can, since we have got a variety of altcoins/shitcoins whose value not only falls in time, but also lose its worth unlike Bitcoin that is bound to appreciate with respect to demand and supply at that very period of time, and also the most use & top traded cryptocurrency with large market volume, which makes it significantly different from the rest of others.

That other cryptocurrency has a limited supply just like Bitcoin, it still doesn't guarantee how valuable a coin will be in the future, and as such never a criteria to look after for.

It can only be solved if Bitcoin is widely used because right now we know tons of countries are still banning it and others are in gray areas. When the price increases that is where it beats inflation but if not it is still the same. Because of how rare bitcoin will be in the future the price will increase but again this will take more time and we still don't know if there are other coins or if all the governments have banned Bitcoin to give way to their projects.

Cryptocurrencies will actually do some damage to a country as all foreign exchange will be going through crypto and not the local currency which could be the recipient . But honestly speaking, tackling inflation isn't a one factor that tackles all scenario, a country has to stimulate trade or in some instances, the central bank will have to try and make cash scarce to try and bring inflation down artificially which is a quite complex process on its own.

Considering the subject was in relation to a currency...Not sure if this is called inflation when you refer to Bitcoin and the effects of supply and demand, afaik to me this is mere volatility!

I consider this opinion very real and the facts are clear. The reason is that one of the crypto currencies called bitcoin has proven that all these opinions are true and not just empty talk. A simple example is the money invested in it. Even though the currency invested for example is subject to inflation, by saving money in bitcoin, the money is not affected at all. This is all proof that Bitcoin can indeed be said to be a store of value asset that is able to protect against inflation.

Yes, one of these factors is what makes Bitcoin the best crypto asset and one of the factors that is able to maintain the stability of Bitcoin's value. Namely because the available supply factor can no longer be disturbed (21 million bitcoins). So with these factors, bitcoin can be said to be a very limited and very valuable asset, and can be categorized as a special asset.

And, there are now several altcoins that are copying similar steps as applied to bitcoin (in terms of supply). This is indeed a good step. But even so, I think replicating Bitcoin's success will definitely be very difficult. Because you need to remember, it's not just about supply that makes Bitcoin as successful as it is now. However, there are other factors, such as a decentralized system. And in my opinion, this decentralized system is what is difficult for altcoins to imitate today. Because even though the supply of coins is limited, if it is still centralized, I am sure the results will not be as special as bitcoin.

#1 The system used and applied to BITCOIN can protect against inflation. This is proven by limiting the total supply and number of new coin releases using the halving system every 4 years. This strengthens the economic law of supply and demand.

#2 It is true that in total there will only be 21 million bitcoins released. This total supply is not necessarily all circulating on the market, because there are also many cases of Bitcoin being stored in wallets but the owner dies, the wallet key is lost and the problematic wallet cannot be accessed by the owner. This of course reduces the circulating supply of BTC on the market.

Yes, scarcity is one of the factors that determine price, but as we saw with other Crypto currencies and Alt coins.... that is not the recipe for it's success. People should trust it enough to buy it (demand) and they should also use it as a currency for it to be useful.

There are too many people buying bitcoins as an investment option and that are only good for the speculators and not for the future of the technology as a Currency. 

Your point is completely about venture investing and not about saving. Back in 2010 BTC was a completely different asset from what it is right now. Then you should've been mentally sick to prioritize BTC over stocks and bonds in terms of savings.

Also, it seems you don't fully understand the concept of hedging. If your portfolio can remain in a drawdown for a couple years then it is not actually hedging.

People should somehow realize these points on which it is really that something a realistic approach on which it is really that wise on having this kind of thinking rather than on making yourself believe
that Bitcoin could save you up from inflation literally which as mentioned that it isnt really that on the ecosystem for it to be considered as a replacement on which it is really just that digital currency
which its value is really that having the potential on increasing but of course there's a risks involved into that. It did really just turns out that there are people who do really goes into the
point on which its not something that true or ideal anymore which makes them that too numb on whats around and whats the reality that they are missing.

Its true that Bitcoin/Crypto could save up your @ss on this worse economy where it do involves with that nonstop or inevitable inflation with the current fiat system
and there's no stopping with that and with this then it would really be just that normal that you should really be taking up some action for you to be able to survive or sustain.

If the current fiat ecosystem can't protect us from inflation, then I don't believe Bitcoin can. It's because Bitcoin isn't part of the fiat ecosystem yet. It's a digital currency that exists virtually and couldn't act directly in a fiat ecosystem. Still, we are unable to use Bitcoin for our daily lives; hence, we shouldn't expect it to protect us from inflation through Bitcoin. But if we are in Bitcoin and could gain some money from it, then it might help us survive inflation. We are earning something out of our real lives that could help us fight inflation.