Bitcoin Forum

Bitcoin won't hedge inflation until it hits 1B wallets: Scaramucci

According to glassnode, there are over 1 billion created bitcoin addresses, but this can not be used to know the number of bitcoin wallets, a site can estimate the total number of bitcoin wallets but no valid data which can be considered accurate about it because a single HD wallet can be able to generate many addresses and some people may continue to use different address for different transactions.

Okay, let us assume that bitcoin wallet one day would get to 1 billion. I assume this because if Glassnode indicate only 1 billion bitcoin address to be existing for now, that means that less than 1 billion wallets are existing for now.

But is what this man talked about be true?

Bitcoin was less than $1 before, it got to $10, $100, $1000, $10000 and reach all-time-time of $69000 last year, now at $21300. Is that not an hedge against inflation? Bitcoin is highly volatile, but those that hold it for long see it as a hedge against inflation.

https://cointelegraph.com/news/bitcoin-won-t-hedge-inflation-until-it-hits-1b-wallets-scaramucci
https://studio.glassnode.com/metrics?%3Bm=blockchain.UtxoLossCount&%3Bs=1509303349&%3Bu=1576540800&%3Bzoom=&a=BTC&m=addresses.Count&zoom=all

Not sure about the exact number needed, but for bitcoin to be a (better) and more stable inflation hedge, what it mostly needs is people using it for that purpose; or simply people just holding it for longer periods of time.

^ People's opinions on what an inflation hedge should be are mostly debatable, but I think people mostly want a far less volatile asset for an inflation hedge, not an asset that moves like a high-beta growth stock.

The address thing seems to be true because what first came to my mind is whether they were counting addresses generated but not used. However, I have already seen that this is not the case, only those that have appeared in a transaction are taken into account (thinking about it, I don't know how they could have discovered those that are generated and not used, it would be impossible because they can be generated offline).

As for the wallets, you are right to point out that the number of wallets will be less than the number of addresses but as for knowing the exact number it is impossible.

The billion wallets thing so that according to him, Bitcoin is an inflation hedge, seems to me to be bullshit.

People tend to believe whatever they feed with from the analytic view to statistics, the datas of the wallets collected comprises of those wallets that have sent transactions to the blockchain and does not include the dormant and unused wallet not minding whether their are generated online or offline.


Bitcoin inflation rate stood at 1.77% which is lower than United states inflation rate and that seems to me that when you talking about inflation rate one needs to take a lot of things into account but using a highly volatile asset like Bitcoin as a hedge against inflation seems to have several consideration because Bitcoin is more of an asset and also Bitcoin is a currency even because, Bitcoin can be used for the exchange of goods and services.

The data isn't really accurate since they're only count of total accounts on Coinbase and Blockchain.com (https://buybitcoinworldwide.com/how-many-bitcoin-users/) while the truly Bitcoin holders hold their coins on hardware wallet which will make their calculation gone wrong. Also each wallet have many address, how accurate they can calculate the whole address are owned by one wallet?

The reason why he said it's need to hit 1Billion wallets is because the adoption, they think if 1/7Billion people use Bitcoin in the whole world already enough to make it very decentralized. I'm not thinking about how many wallet would make Bitcoin hedge against inflation, but I would think how all the countries especially China, India etc end their drama to ban and unban Bitcoin.

That puts it less into the category of inflation hedges and more into a category with growth stock as pointed out by mk4. Being an inflation hedge would imply a certain disconnect from the stock markets, similar to gold, however so far Bitcoin seems to behave more like a leveraged stock position. Looking at gold, however, it doesn't really look like much of an inflation hedge right now either.

Depending on what one expects from an inflation hedge it might still be early to tell though. It doesn't look like the decoupling from the stock market will happen any time soon, however I do expect Bitcoin to make up for lost purchasing power in a year or so.

A person can own multiple addresses and wallets. It's hard to argue that if we had 1 billion wallets, bitcoin wouldn't be as volatile as it is. 1 billion wallets doesn't mean 1 billion different users, but even if it did, I don't see how that would matter. If a lot of people dump bitcoin whenever something bad is said about it or when the governments announce more regulation or even bans, the value will always drop. More people owning bitcoin can also be seen as more chances of dumping. We can't know if they are strong or weak hands.

Bitcoin as a hedge against inflation? I guess every person has a different view on this. Good luck in explaining how good bitcoin is at maintaining its value to those who invested in it at $50-60k. On the other hand, its much easier to use the same logic on those who invested at $1-2k, for example. 

Their accuracy here may not be totally confirmed as genuine because the source to their statistical assumptions is only base on centralized exchanges source and decentralized exchanges/hardware wallets aren't inclusive here, and i think it will be a little bit a teadeous task enough to get the right statistics as everyday and every minutes we got lots numbers of wallet getting created from different sources, so this can be rather left inconclusive.

Bitcoins is getting less volatile

2009/2012, the volatility was 99x
2013/2016, the volatility was 33x
2016/2020, it was 6.24x
2020/till present, it has been 3.94x

As the adoption continues, the volatility has been decreasing.

You are right, but in long term, bitcoin is a hedge against inflation, after the significant down time, bitcoin got to all-time-time. The last I could remember was when Elon Musk wanted to manipulate the market, followed by Chinese government FUD, this resulted in bitcoin price downturn from $63500 to a price below $30000, yet bitcoin skyrock back and reach $68900.

But if people that do not believe bitcoin is not a hedge against inflation is asked if it is a hedge in long term, they have to think about it very well to know how true it is. Bitcoin is highly volatile and can be regarded as a speculative asset, but in short period of time. If it is a long period of time, it is actually a hedge against inflation.

It is not actually correlated with adoption.

When an asset has higher and higher price, it becomes more expensive and the volatility should be consequently smaller. At least the difference between two all time highs should be smaller. It's natural.

Bitcoin now has price in thousands of dollar but you can see its in altcoins now. Altcoins are easier to have x10, x100 in bull run and it is exactly what Bitcoin experienced with its past bull run.

Higher price means higher marketcap and it's harder to manipulate higher market capped projects.

The inflation rate of bitcoin is under the inflation rate of the USA and this shows us bitcoin still can be counted as a hedge against the inflation rate. But still, the definition of inflation hedge can be different and you cannot expect to see the market is always bullish in every timeframe there is not any market like this and still, according to all the analyzes the price of bitcoin is bullish in longterm and this can be a hedge against inflation rate if you enter the market in a good situation or if you aim for longterm otherwise this cannot be a hedge against inflation rate.

Flat out not true.

With things like the lightning network more and more people are transacting without their wallets / addresses being touched. Addresses / wallets are just one small indicator of what is going on.
As more people use LN for day to day transactions BTC price will change. But there will be limited visibility on chain with addresses / wallets.

Some people like LN, some people don't. At this point it's 'whatever', it's being used and it's growing so all other things aside lots of small transactions are going to matter more to theBTC price then a few larger ones.

-Dave

Relying on wallets as a way to measure the growth of the number of users will give wrong and inaccurate results because there are many ways to own bitcoin without having a wallet, for example, central platforms, second layer solutions, managing more than one wallet for one user and others make it an inaccurate standard.

Finally, even if there was a comprehensive adoption and was measured with better estimates, the market capacity is still an important criterion that making the volatility slower, for example, with a market capacity of 100 trillion, we will get much less volatility than a market capacity of 100 million and so on.

we can just think number of addresses mean adoption for bitcoin. i see nothing beyond that. each person can hold different types of hedges against inflation.  bitcoin , stock, gold  or whatever it is. it depends on each different person.

actually speaking bitcoin is a great inflation hedge i.m.o . if we invested in 2010 we face no inflation. but the risk is high volatility of bitcoin. to use bitcoin as a hedge against inflation we must have knowledge about market conditions ans fundamentals. if we bought the top on 2021 April we would have just lost our money. but if we buy now at this moment we would be making a great inflation hedge as well as we will make a nice ROI.

Everyone has a mark they expect bitcoin to reach before they begin to see it as a possible hedge against inflation, but choosing to see it as one or not has not stopped it from acting as a hedge against inflation.


I agree with you somehow. I think many people fail to agree with this because it is unexpected and because bitcoin is still considered unreliable to them they fail to regard it as a possible hedge against inflation. Like I mentioned that people say things based on opinion, you will get to find out that these opinions are not the same amongst everyone, so as some say bitcoin is not a hedge against inflation yet or will ever be, some other experts have gone ahead to endorse it as one of the possible hedge against inflation.
https://www.cnbc.com/select/where-to-put-your-money-during-inflation-surge/

I also don't agree with the article, in my opinion bitcoin will be a good hedge against inflation in the long run. If you bought BTC last year near the ATH than it's not a good hedge. The high volatility we are seeing at the moment can discourage some investor now to invest. But the cheaper you manage to buy bitcoins the better it will be as an hedge in the long run. Another thing with the bitcoins price is that it's always quoted in USD and the Dollar had a very strong year, rising 10-20% against many other currencies. Taking that into consideration for all of the non USD investor it's another boost to the inflation hedge.  The number of real bitcoin wallets is hard to calculate because so many wallets change their address for every new transaction. Even the mobile wallet that I only use for small transaction below 100 USD changes the bitcoin address regularly, and then most of the investors have not only 1 or 2 wallets but probably 3-5.

It is highly volatile, but it does appreciate in value overtime, hereby it does stand against inflation (US dollar's, not its). Whoever bought when it was valuated at less than $20,000 has somewhat protected himself against inflation. Bitcoin gives more than it take over the long term; charts say so, not just me and Oshosondy.

Cointelegraph really disappoints me.

It's correct that about a billion different addresses have been used, but that number is meaningless: it's like counting how many people touched different banknotes.
There are about 40 million funded Bitcoin addresses, and since many users have more than one funded address, there are less wallets than that. It seems like the majority of Bitcoin "users" keep it on an exchange. It's debatable whether or not they can be considered real Bitcoin users.

its not about bitcoin needing X users

bitcoin is a hedge already. its deflationary by its very nature..

if you had $2000
and put $1000 in a bank account
and bought $1000 of bitcoin

you yourself (dont worry about anyone else) will definitely see how your bank account value buys you less product year on year, and your btc holdings can buy you more products year on year

if 1 billion people want to hedge against fiat then yes 1 billion people would need to use bitcoin

but if only 60million want to hedge. then obviously only 60million need to use bitcoin.

its not a case that bitcoin only acts deflationary if X people use it.
bitcoin was deflationary even back in 2010-11 when there was not even a million users

bitcoin is deflationary by default of the code rules. not due to people counting

BTC is not a hedge against inflation if you bought in the ATH and didn't hodl for 4 years at least.

Was it a good idea to buy at 69k? No, unless you plan to hodl for 4 years (until 2025).

Will it be a good idea to buy in late 2025 (new ATH)? No, unless you plan to hodl until 2029.

It's as simple as that.

Almost nobody wants to buy during a bear market, everyone wants to buy during euphoria:

https://en.wikipedia.org/wiki/Herd_behavior
https://www.investopedia.com/articles/financial-theory/08/contrarian-investing.asp
https://alternative.me/crypto/fear-and-greed-index/

Currently and until late 2022-early 2023 it will be an excellent time to accumulate, just like it was back in 2018-2019 and 2014-2015. :)

I'm gonna love it if BTC reaches 1 million USD by late 2025, then it drops to 200-300k by late 2026 and everyone calls it "dead" and a "bad" hedge against inflation.

It will ALWAYS be bad if you want a get quick rich gambling scheme. ;)

People need to learn how to practise patience:

https://www.youtube.com/watch?v=Yo4WF3cSd9Q

firstly inflation/deflation is not based on the daily/weekly pris whims. its more about the long term view of 1 year-1 decade view of value vs product purchase ability

yes its not smart to "buy the high". and if you look at the amount of orders happening at the $69k-$70k range. not many people did actually buy the high.. thats why it topped out and ran out of buyer energy to stop going any higher.

for those unlucky few that used emotion instead of logic to have bought at the high. thats not a flaw of deflation or a fault of bitcoin. thats a flaw in human emotion and decision.

that said. those unlucky few will have to wait a bit longer to realise the deflationary effect as they will have to wait longer for deflation to catch up to that temporary price speculative bubble moment.

on the flip side not many got lucky to "buy the bottom" who get to see deflationary action profit them sooner.
but again this is not that deflationary effect is a daily/monthly effect thats noticeable that soon. its a long term view of 1 year/1decade. where it start to be felt by the masses in a noticeable way.. and only a few people got lucky to have picked the right temporary cheap rate to get their value noticed sooner

bitcoins deflationary rate has nothing to do with the price whims of the daily/monthly changes. as thats just speculative changes within the price window. what is deflation is the subtle hidden change to the price window the price moves within. where the lowest bottom edge of the window was lower last cycle than it is this cycle. slowly moving up each cycle

EG, the windows:
2009-2012  $0.01-$32
2013-2016  $13-$1200
2017-2020  $750-$20k
2020-now   $4.8k-$70k
where by the deflationary increase is

2009-2012  $0.01
2013-2016  $13
2017-2020  $750
2020-now   $4.8k

I wasn't "lucky" when I bought the March 2020 bottom. I used logic, not emotion. Didn't even buy the COVID fearmongering.

I was studying BTC for years and just waited for the right moment... the COVID economy meltdown (black swan event) gave me that chance.

For the early adopters, there's no argument needed as we've proven that bitcoin is a good hedge against the inflation. But as said to those that we can say, late and ATH buyers, they are yet to prove this one. But if they do such buying more while it's low and holding it until the price gets over their buying price, they can prove to themselves that bitcoin is literally a good hedge against inflation.

I agree, and those that have bought at high requires more patience to prove to themselves if they truly believe unless they losses that patience and sold at dip with losses. Can't blame them for that decision though.

Exactly. When the market shows opportunity, they won't bite it as they think that it'll get lower but look at them when the market shows dominance and bulls again, they're the quickest to be hyped.

I guess it's all just assumptions a person makes based on what he's learned.
Maybe other people will have other assumptions that are different from that person.
What is clear is that we will not know whether the assumption is right or wrong because we have not lived what it is assumed to be.
So rather than go into that assumption, we should enjoy the journey of bitcoin from time to time while we still have the opportunity.
I don't think too much about those assumptions because it would take a lot of time to think about them.

That's true, we are in a period where LN will not be forced to be used, hell people still use Legacy network for bitcoin and pay tens of dollars just for a simple transaction but they prefer it that way and they can do that. We are mainly using segwit and bech32 addresses, and pay very little amounts these days which is also fine as well.

In the near future, LN could become more popular overtime because it's cheap but I guarantee you that it will not be a big deal considering we will always have options. This will result with bunch of people using bunch of different ways and not really everyone using the same thing but it's all bitcoin and its blockchain nodes for sure.

Why does Binance charge cheaper fees for legacy vs SegWit (0.0002 vs 0.0005 BTC)?

https://www.binance.com/en/fee/cryptoFee

Does it make any sense? AFAIK, they also batch transactions...

You are right Bitcoin is less volatile because Bitcoin price is high at the moment, what most Bitcoin price analysts failed to include in their analysis is the fact that, the present price of Bitcoin is an all time high in the past and this is why Bitcoin is less volatile compared to altcoin. So for long term base bitcoin is consider to be the best option since the price volatility ratios is low,  as it stands Bitcoin inflation ratio is lower than that of the United States. And talking about altcoin there just garbage that can easily get pumped and dump at will. When Elon musk thought Bitcoin to be like dogecoin he made is statement and coincidentally the price dropped significantly and many believe that Elon musk statement contributed to the drop in the price of Bitcoin, but than Bitcoin have maintained a strong resistance level that did not allow Bitcoin price to drop below the previous two all time high before Elon musk came into the scene.

The number of BTC wallets doesn't matter. It can be 1 billion or 100 million.
There are three things necessary for Bitcoin to become hedge against inflation: increasing demand, better utility and decreased price volatility.
I know that the demand for Bitcoin cannot increase forever and there will be ups and downs, but the investors need to recognize Bitcoin as an investment that is secure and promising.
The high price volatility is stopping many investors into putting their money in BTC. I think that BTC will remain a high risk volatile asset forever.
The real anti-inflation assets like gold and real estate have less price volatility and bigger utility than BTC. Maybe that's why they are preferred over BTC.

You mean bitcoin is not and never will be an inflation hedge. I think on the contrary, from the beginning bitcoin has been a hedge against inflation, the price movement of bitcoin is only short term. Looking at the bitcoin price over the past 13 years from a coin that has no value and is currently priced above $20k, there is no other asset class with such good growth over the long term. Gold and real estate have certain utilities in life, but bitcoin also has utilities that neither gold nor real estate have. Depending on the needs of each person and each case, no type is better than the other.

That's correct it already is an inflation hedge, but you have to look at periods of 3-4 years to see it. I'm 100% sure that it's going to be worth more than 20k after the next halving, so whoever buys today will have more in terms of purchasing power in 2024.


All those bitcoin news sites disappoint me, especially the speculative articles that are like 99.9% wrong. Last time I read them they wer esaying that Bitcoin has broken some bearish trend and is going for 28k USD. A few days later it went down never even reaching 26k.

How can you say that you are not lucky when you already bought the bottom? Or maybe you mean to say is that the price drops for more after you are done buying? If so then, it should gave you a lesson to not all in when buying but you can choose to keep some of your funds in case the price plunge for more. Logic is truly the ones that we will be using here not emotion. Being emotional is in fact a hindrance here.

@OP that wasn't true. People can believe what they want. Many people believe that bitcoin is an hedge to inflation, this is why they are transferring their fiat money on here. There is no need to wait before we get to 1b wallets.

What tools do they used to estimate the volume of bitcoin address and how do they know is 1 billion address?
I think they are giving a random speculation.


Bitcoin prices has never followed these sequence. There have been lots of stories and rumors concerning bitcoin though not all story that works accordingly. So lets assumes that it's a randomly speculated analysis.

The statement may likely be true, because several wallets are been downloaded every blessed day which has an address, and moreover, there are 7.97 billion people in this world of which about 4 billion are kids, whereas the remaining 3.97 are adults, which if you are to sum up the total number of crypto users who own a Bitcoin wallets, we could probably be up to 100million worldwide, of which each users own at least 5 to 10 Bitcoin wallets which has an address (i.e Coinbase, Trust wallet, Binance, Kucoin, Remitano e.t.c) including faucet, casino wallets addresses and dormant wallet addresses that has never done transaction before, the statement could be true. So I don't doubt it