Bitcoin Forum

We all ready see this, prices specially Property rent and buy prices are going higher.


Do You think its coused by inflation?  


If so do you think the gold and btc Will be hedge?

I think the assets prices going up in Europe,  USA, Australia Central Banks just started money printing those 3  countries wich i mentioned above


As we Know in canada there is about to start Economic recessions If they dont start rate cuts like USA, EU, AU just did.


Uk Economic situation is 50/50 it can go down.

Do You personally feel that Fiat Currrency losing slowly puraching power?  

I do feel that, but the problem is i cant buy groceries food and daily needs with Bitcoin first i have to Exchange my btc to Fiat, so the Bitcoin and gold is Not really Solution for that problem!!  

It's really hard for BTC to be a good hedge because of its volatility. Imagine you wanted to avoid losing your wealth to 2% of inflation per year so you decided to put your life saving in Bitcoin a few weeks. By today you'd lose 20% of your wealth already, and the future would still be uncertain - would you recover soon or dive even deeper? Imagine if now you have an emergency and need a portion of those savings - now you have to sell at a loss, or maybe don't even have enough money due to crash.

As long as Bitcoin will remain volatile, it will only be suitable to be a small part of investor's portfolio, meanwhile you can buy serious amounts of gold and be reasonably confident that it won't crash in a single day.

Personally I will believe the Federal reserve tied banking system. They can print the money whatever they wish means then there is no control or reconlisation with that. If there best option for it means you need to choose the BTC and Ethereum only as a option.

Fiat is being controlled by some giants and this well known to this world. Since those people do not have access they are not allowing bitcoin to stay stronger.

Well actually Bitcoin can be the answer to that problem and it is very evident in countries like Zimbabwe and Venezuela where they are struggling with hyperinflation. In these countries it is not strange for Fiat currencies to lose value daily and people are turning to Bitcoin to protect the buying power of their local Fiat currency.  ;)

Looking at the long-term, Bitcoin's value are steadily going upwards, where Fiat currencies are losing buying power daily. Inflation is just a small piece of a system that are doomed to failure.  :(

Gold is often perceived as a great hedge against inflation, but there's actually data suggesting that that's only true when inflation is in significant levels. ^{[1] (https://www.sunshineprofits.com/gold-silver/dictionary/gold-inflation-hedge/)[2] (https://www.reuters.com/article/us-gold-inflation/gold-as-an-inflation-hedge-well-sort-of-idUSKCN1GD516)}

Bitcoin shares a few properties with gold so it may act the same way, but being relatively young, we don't really know yet. I don't think we've even seen price growths that could be attributed to inflation -- that might be because like gold, Bitcoin does not react to "normal" levels.


If you're not anticipating Venezuela levels of inflation, it should be safe to keep a portion of your wealth in fiat. You don't have to go all-in on gold and Bitcoin, as they're more for long-term protection anyway.

How? What do you propose? People of Zimbabwe and Venezuela all buying BTC?


What about scalability and utility problem?

It depends on the country and locality. There are many places where the housing bubble had taken the price to astronomical high earlier but not getting reduced. Inflation is just one of the catalysts.


Gold and other precious metals are definitely a hedge but not bitcoin. Even though bitcoin is limited in numbers.


It's true that fiat system is slowly getting devalued and the central banks needs to put similar percentage of money into the economy every year.

But bitcoin or any other cryptos can't be a solution to it, not at least at the global level. Cryptos are not yet accepted globally and a lot of countries are still in dilemma whether to legalize it or not!

Gold and other precious metals like Silver is a great alternative to maintain personal finances afloat during hard times, but not bitcoin unless you are an early adopter.

You are asking stupid questions.Off course that the inflation causes prices to do up and the money to lose it's purchasing power.Just read more books about macroeconomics and finance.Fiat money are designed to lose their value,because they are just debt.The only protection against inflation is just to make more money and diversify your portfolio of assets.Bitcoin isn't an "easy solution" against inflation.

Gold is a lot better of an option to use as a hedge than bitcoin. Bitcoin, on the other hand, is a lot more volatile than gold and could change rapidly in a short span of a few hours so you can't really use it as a hedge. Inflation can rapidly change the price of commodities in areas affected and as volatile as bitcoin is, it couldn't really support you when inflation comes.
Besides, crypto hasn't really been able to spread globally or at least is not yet accepted globally so it is difficult to turn to it as a hedge. You can hold bitcoin by using a part of your current assets but reserving some in case of emergencies is needed since you cannot ensure that the amount you used to buy bitcoin would still be the same when you sell it.

It is by design that the fiat currency is depreciating rather than appreciating. That is precisely the logic behind the rising prices of goods and services, and of course together with salaries and benefits to cope up with the former. That is why it is not advisable to save too much money in the banks. It is better to invest or save on properties whose value appreciates rather than depreciates such as real estate properties. And if one saves money in the banks, it will have to earn a regular interest. The problem occurs if the interest earned is lower than the inflation rate. That would spell disaster.

Bitcoin, on the other hand, is appreciating. And so its purchasing power is rising instead of decreasing. And that makes this currency much better than fiat. Take the case of that 10k BTC pizza. 10K BTC today is already worth approximately $80 million.

Price increases on basic goods and needs are basically caused by inflation but you need to considere other factors why it had even increased in the first place. First look for the current inflation rate your country has if the rate ranges around 2 to 5% then it is considered healthy and its not one of the main factors why the prices went up secondly you can look at other factors such as tax increase most specifically excise taxes related to that product if an excise tax is issued on the most basic of the goods like gas then a lot of industries including housing can be affected.

Also stocks prices goes higher not just real estates.  It is because of money printing. It is printed to much to revive economy, but it just push up prices of stocks and real estates. Companies buy back their stocks. Peopel take loans to buy houses and pay back less then they borrow.  It is of course super nice until it will last :)

Price of a product increases for two reasons,the one is primary increase in demand and decrease in the supply of the product will relatively increases the prices so lets take that property buy here,the land might not be available at the place you are looking to buy in vast then the prices will be higher and higher.Inflation also causes the price to be increase which doesn't alter the value of product only increases the figures to be gives to buy it.

If you think it's the first time fiat is losing its purchasing power then may be you are someone who has just grown or just gathered his financial knowledge. Fiat is a currency created to lose its purchasing power over time. It's been doing so since it's creation. Inflation is not prices going up it's the purchasing power of your fiat coming down. But the thing is losing purchasing power is actually sign of economic development. As per the Keynesian Theory of Macro Economics Inflation is necessary for economic development. So a crash would occur when the opposite happens which means when the fiat is gaining it's purchasing power. However in any case bitcoin I think might not prove to be a great hedge because it still doesn't has a very well organized spread among the masses which means it can still be purely manipulated pretty easily.

What Will be as the Great hedge?

Or we just follow the circles, When inflation high we should just investing borrowing and selling.


If inflation down we should buy Everything?


This repeating process Will be hedge byself? 
Do any safe hedge actually Existing?

It pushes up everything. What people don't really pay attention to is how much risk capital flows into tech and bio startups with little to no working business model. Cheap money means investors are willing to take higher risks.

No way this will drag on for another decade. It's a ticking time bomb that will take down everything with it. I doubt anything but the strongest fiat currencies will be able to preserve wealth during that period of time.

I wouldn't call 5% inflation healthy at all. In fact, it's something I would consider moving to another country for, especially if the taxation system is also designed to empty your pockets.

If you think logically, 5% inflation means that your money will lose 50% of its purchasing power in a decade. That's something I only see happen in financially weaker countries.

And now you are just moving out of my point, last time I checked it's about how risky it would be for Venezuela to still pursue in crypto investments as a saving grace for their country and now you are just picking of parts of my statements just to prove a point but I'll give you a worthy reply just to rebut what you are saying. Contrary to popular belief inflation (not hyperinflation) promotes economical growth for the country, it may increase the prices and all but it signifies demand for the products in that country unlike deflation where even if you have a bigger buying power only signifies a decrease in demand that is why they are giving more value for your money, Japan has been battling deflation (https://www.japantimes.co.jp/opinion/2019/03/27/commentary/japan-commentary/struggling-achieve-2-inflation-try-3/#.XZJelGYRWHs) for years and they still haven't reached their target. And why are you assuming that a 5% inflation rate happens yearly for 10 straight years? Inflation (again not hyperinflation) doesn't work that it is a means to balance out supply and demand if everything normalizes with the help of inflation then we can start to expect a decrease in inflation within a year or so or even by the end of a quarter.

I agree with you that fiat money is no longer valid. The general adoption of bitcoin is a long process. Remember how long people got used to credit cards. It will be the same with bitcoin - at first slowly, but after gaining some critical mass - the process will go exponentially.

Sure, I can see fiat money losing purchasing power, but it's a very slow process and in some countries like switzerland it's very slow. If a currency is losing 2% a year it's not such a big deal, as it will take 50 years for a product to double in price. The problems begin when you go above 5% inflation because people begin to notice it and worry. As the inflation grows they dump fiat for more stable investments and the economy snowballs into a giant disaster, like in Zimbabwe, Venezuela and Argentina.
If you live in a country with inflation starting to reach 10% it's a good idea to dump all fiat while you still can. If your inflation is at 1% you shouldn't worry... for now, because all fiat currencies eventually die. 

If what you're looking more than anything is a hedge against inflation then I have no doubts that at the moment gold is a better option than bitcoin, holding bitcoin for the long term is for those that are looking not only to protect their investment but also to make it grow very rapidly compared to many other types of investments, also it is clear to me that fiat is losing its purchasing power but in most countries the process is still slow so gold is not going to protect you that much from that process as you need to buy gold for a premium and then sell it for a lower price.

No one puts his savings in Bitcoin for just a few weeks to hedge fiat's annual inflation.

As you know, Bitcoin might not be the best hedge against inflation short term wise, but if your time horizon is at least a couple of years, the volatile nature of the market in the short term shouldn't be much of a bother with how Bitcoin only needs a couple of months to undo years worth of inflation. Charts don't lie. It's there for everyone to see.

In the end, there is a risk to anything you do. It doesn't matter what asset you choose as hedge against inflation, nothing guarantees that it will work as intended if you only park your capital in that asset for a short period of time.

You should buy the things before the inflation and sell it before the deflation,doing it in the opposite will reduce your total amount of money even if the value is still same.But the best thins is to avoid inflation and deflation by investing on something which has more stable value.AFAIK gold is the best solution to get away from these economical instability.

Gold will get a profit right away, it is already going great recently (as great as gold can get, not compatible to bitcoin when it is on a bull run) but bitcoin will probably take some time. What you have to realize is that gold is directly pegged to dollars, if dollar loses its value then gold increases in value, they are not separated by anything else, even on price changes, we are talking about a limited number of gold in the world and increasing number of dollars hence by theory as long as humanity sees gold as something valuable there will always be an increase in gold.

On the other hand bitcoin is pegged to dollars only in price calculations, they have nothing else in common and even though we think the price of bitcoin will go up when dollar goes down, there is still the fact that people could simply just sell their bitcoins and drop the price at the same time.

You are right in this statement.
In the event of a crisis, the best way out would be to invest in metals, which are pegged to the Dollar. In a crisis, everything is subject to falling but metals.
Bitcoin itself can be dumped by many who understand this factor to skip their money for gold or silver.

Yes, that's right. I also used to think of the world that only uses bitcoin to pay for services. But it occurred to me that no one wants to hold on to a type of asset that is highly volatile and always manipulated by those with a lot of money.
But I still believe that central banks in countries will solve inflation. The recession is coming but we still have gold to hoard, don't worry about fiat money.

That pretty much is the definition of inflation--prices going up, although the government measures inflation with a "basket of goods" model instead of rent and real estate values (I think).  And if there's too much money floating around, people buy more things and prices rise because of the increased demand.  I'm not an economist, but I would think that the Fed releasing so much new money into the system has to be driving prices up.  Plus interest rates are extremely low, so there's a lot of borrowing going on.

I certainly see your point, but there's nothing guaranteeing that in another 10 years a pizza won't cost 10k BTC again.  There has to be demand for bitcoin in order for its price to go up, and based on its volatility I'd say that demand fluctuates wildly.

Metals are not pegged to the dollar.  The dollar used to be pegged to gold, but that ended in the 1970s.  Gold, silver, and the rest of the precious and base metals are priced based on open market trading.  Hell, if we were still on the gold standard, there would be no way for the Fed to keep printing money.

Here in India, the reverse is true. Retail inflation came down from 14% to 3% during the last 6 years. Property and rent prices are either stable or declining. So I can't readily agree with you when you claim that inflation is making fiat currency worthless. But that may be the case in other countries, I am afraid. But here, if things go on like this then very soon we'll be having negative inflation.

BTW, gold prices have increased recently. But you can't use that argument to support the theory that fiat currency is becoming worthless. The gold price movement is more related to the market dynamics, such as supply and demand. From what I have seen, apart from gold, many of the commodities have become cheaper during the last few years (electronics, vehicles, and even services).

Definitely that's a long way to go but seriously this issue has been raised all over the community and even the government can't control the inflation rate.

While bitcoin and other cryptos could be our last resort because of its promise of appreciating than deflecting. And we see the first world countries adopting the cryptos and carefully researching how they can innovate more. Don't worry OP, you are in the right track and you'll see in about some years, you will be able to shop with just your phone on your pocket.

This is just the beginning.

Inflation is actually under the control of the government central banks and other financial bodies of the government. However, it is not all the time that the government can successfully control it on a tolerable or even desired level. Sometimes, it goes beyond their percentage target, and moves out of control. And it is during such times that the purchasing power of the fiat currency is getting weak.

It is at these particular times when Bitcoin is the best way to go. Bitcoin is not under any inflation laws or regulation. But the problem is that it is completely under the influence of the public and free market in which a whale could manipulate the prices.

Rate cuts are intended to raise inflation towards the inflation target. That's literally what they are for.

I doubt that a single rate cut would have any real long term detriments. Nor is there really any reason to believe that inflation is caused by rate cuts alone - it can be related also to the velocity of money, the money supply, etc. (but of course, interest rates do play a big part).

In regardsr to your point about losing purchasing power, it's not really anything new. There is a reason why a savings account is not considered to be a good store of value, when it's denominated in fiat. When something doesn't have intrinsic value, it's bound to lose value in the long run (except in deflation).

The discussion gold and bitcoin as a hedge when crisis comes is still a question mark. Some people consider gold and bitcoin to be a hedge, but some also just say that gold can do it. In my opinion, if you are looking for something definite hedge then choose gold, because gold has been proven as a hedge.

Unlike bitcoin, bitcoin has never been through a crisis before, especially in 2008 so I can't clearly say whether bitcoin is capable of hedging, but I really hope that bitcoin can do that, because it can increase price much higher.

If your problem is that you can't buy daily necessities with gold or bitcoin, I don't think it's a problem. The biggest problem is the crisis itself, you will lose more money if you do not invest your money into gold or bitcoin rather than prioritizing daily needs.

Well, if you consider Bitcoin and gold not a solution to be used as a hedge, then what is the solution to this problem? Will you still only hold Fiat? Obviously not, because fiat will continue to be eroded by inflation.

And maybe Bitcoin and gold are not the perfect assets to be used as hedges. However, Bitcoin and gold can be used as investment portfolio diversification. Under certain conditions, Bitcoin and gold can be the best solution rather than just holding Fiat that's always struggling againt inflation.

bitcoin can overcome but not all, for example is the country of Venezuela where they are exposed to massive inflation because their currencies have experienced a very large decline, so people turn it into bitcoin.
and also many other commodities, you can buy gold, goods that are not affected by inflation.
then Fiat will still apply to buying daily needs.
I think it's not too difficult to exchange your BTC to Fiat it doesn't take long. just a few minutes the most important value of your money still even increase.

Inflation is caused by printing Fiat money in unlimited quantities. Cryptocurrency, on the other hand, is deflationary because it can't be printed or created.

If you see countries have loans from each other and number of unpaid loans is huge, in overall world has unpaid loan if you see statistics, it's curious. So this means there is worldwide inflation which of course causes rise in prices. When you took loan from me, I do the same from another country and etc, none of them were paid so we printed money, loan is loan in statistics.
Btw nor bitcoin can fix that issue because of it's price calculation mechanism. We need something with really fixed value and limited supply. This way everything will have same price on very long term. But oh, governments don't want that because they can't make money from it.

If printing of fiat money stops then crypto currencies will not be deflatory only the value of fiat money will get diluted into the decentralized crypto currency.

US started the race by those short repo operations, then continue to 14 days repo.. that means banks are short for cash and the shortage is huge.
Feds printed more then hal of trillion us dollars, in fact those freshly printed dollars in some way will go to the real economy wich will cause some inflation... maybe this is it. and you can see it already..

Inflation is usually characterized by repeated price increases and over a long period of time, especially for basic needs. Inflation is always used as the main reason for property players to raise property prices every year, even though if carefully calculated the increase in property price is higher than the increase in inflation. Some point which affected the property price increases is: demand, supply availability, investment value and the most important thing, in my opinion, is its location. So the increase in property prices is actually not due to inflation but rather triggered by other market factors.

To overcome the economic recession of each country, have different formulas and policies, by looking at the situation of each country. Not necessarily the method applied in America can be suitable and effective if implemented in Canada.

Gold and silver are still the safest choices for long-term investments even though the current trend is cryptocurrency, and the most important thing for investors is to be able to read when is the right time to invest and where to invest. Investors can see and open the opportunity.

Fiat money are losing purchase power.Irony is that we had deflation in world after massive printing and rates near zero or below zero.Bitcoin is unique alternative because of his low inflation and because bitcoin independent from Central Banks.If now or near future will be inflation then i think we will have hyperinflation
That case bitcoin is great
I also think that dollar will lose his dominance and bitcoin is great dollar hedge.Will be time when bitcoin and gold will rise together

Nope, not all the people are switching to Bitcoin to replace their local currency, because it will be a bit to premature to do that, because not all the merchants are accepting Bitcoin as a payment option ...yet.  ;)  They are converting some of their money to Bitcoin to hedge against the falling value of their local currency.

It is just a question of time until we see some 3rd world countries making a decision to accept Bitcoin as a reserve currency, because they think it will solve their economic problems.  ::)

inflation and recession are frequent and I think this is normal. It doesn't say too much about the power of fiat money. For me, fiat money still has the power of liquidity now, there are many forex traders and abandon coins because of its unpredictable volatility.
I know that bitcoin has a deflation mechanism but who will guarantee it if organizations manipulate it? By that time, the bitcoin value is only 0 and there will be no more features.
so I still support fiat money.

 
actually the inflation is good for any government and bad for ordinary people, why? here is why it is good : the more inflation is, the turnover of money, business pays more taxes, GDP of the county is growing as well, all is good and that means that economics is in a good shape.. why it is bad for ordinary people, cause that means that prices for all products you are consuming are getting higher.. the coffee you used to buy instead of 3$ will cost 4$ and so on.. not good.

But the question is what will replace the dollar when it losses its dominance? Most countries of the world are facing the same problems as the US dollar and many economies are not big enough to use their currency as the reserve currency of the world, some have proposed to use a basket of currencies in order to solve that problem but that has never been tried before, the truth is that if we do not go back to a gold standard a global economic crisis is a given.

A mixture of very strong and dominant foreign currencies is another way to lessen the risk of currency reserves. This is a better way to go given that the US has entered into a number of trade issues with other strong currencies in the world. But I think this is very temporary, most probably only within the term of the current president.

The gold standard is the most solid and trusted standard. That cannot be denied. Bitcoin is a far alternative for now that might hardly sell to more traditional bankers and businessmen, especially because it has already shown several times in the past that its unpredictability is both deadly and glorious.

Inflation gradually decreasing the value of fiat money so yeah the purchasing power getting depleted but may not completely lose in near future.On ther other hand decentralized cryptos popped up after the economic crisis which made some changes into the economy system which makes people to think about alternative to fiat and one who understand it really never store their funds in fiat only consumer is not aware of it and we were never taught about the inflation as well.

So far USD was by far best against inflation. You can see it when looking at gold price. A month ago it reach new ATH in Euro, while it was still 20% below its USD ATH. And this happened in only last 8 years.  Same when you check https://bitcointalk.org/index.php?topic=138109.1200 . You see USD in 2019 come on the top 50 list way after other currencies. So only in 1-2 years we see the difference.

I believe that the dollar should be included not only in the rating of the first 50 currencies, but immediately in the top five best currencies in the world.  Especially in recent years, the United States of America has again shown improvements in its economy and GDP.  This directly affects the value of the dollar.

Let's break your question into two parts:


There is no brainer in that. In every country where inflation rate is positive, fiat currency of the respective country is surely losing purchasing power. The supply of currency is increasing more than the prices goods and services covered under CPI making currency less and less valuable.


I disagree with you. Even though you can't fulfil daily needs with Bitcoin but it is perfect instrument to park excessive funds. For example, I have $500 and don't need them for a while, I can put them into Bitcoin and withdraw whenever required. This way, rather than keeping money idle and seeing its PP fall, I can see it growing. Converting BTC to fiat is not very time consuming process. It only takes 20-30 minutes. So investment in Bitcoin is just like ready money.

Yes of course it is caused by inflation.

Yes, I believe that gold and btc will be hedge at this critical point but it's not possible until the global adoption of bitcoin.

It's quite obvious that due to inflation currency started losing purchasing power.

Lose it's dominance against what?  Interest rates in the dollar zone are 2%. In Australia and the UK they're 0.75%.

In the eurozone they're -0.5%. Ditto Switzerland and Sweden. Japanese interest rates are -0.1%

So how on earth can the dollar lose it's dominance against all these useless weak currencies that have negative interest rates? Who on earth would park their money in euros and pay for the privilege because of negative interest rates, rather than put their money in dollars with positive rates?

While the gold standard will be the best way to recover the confidence of their citizens, governments will never do it unless they are forced to because they are happy with the manipulations that fiat allows them to do, they can tax people with inflation while they protect their assets, fiat allows them the possibility of not being fiscally responsible as they can always print more money to get out of their problems but that is not possible with gold and they resent it for it.

Yes, undeniably our countries fiat currency is losing Value since two decades ago and I believe this crisis will continue until the generation of our grandsons. It is a situation that no one can escape, sad but if the economic will not improve the balance in financial system will be hard to restore.

Since all currencies around the world are fiat and are not backed by anything this is something that is happening around the world and not only in one country, some countries have abused their power to print their currency more than others and we can see an example of this in Venezuela, but if this continues this scenario will eventually be seen all around the world and there is nothing we can do to avert it, for this reason we need to ask ourselves what we can do to protect ourselves? And investing in bitcoin is a great way to protect our wealth before the crash comes.