WHY IS INFLATION IMPORTANT FOR CRYPTO?

[Wesleyeric]

But what is inflation? Inflation is the process by which currencies lose value over time, causing prices of consumer goods to increase. Because most economists believe that some level of inflation is good for the economy, the U.S. government, for instance, has printed more money than consumers actually need for decades. It’s the reason that a Coke that cost a nickel a half-century ago goes for a few dollars today. 
Bitcoin, on the other hand, has generally increased in value much faster than the U.S. dollar has lost value — going from virtually worthless in 2010 to more than $20,000 in late 2020. (Because it’s a volatile market, Bitcoin has also seen dramatic spikes and declines, but the trendline over time has been upward.) This has made Bitcoin an increasingly popular hedge against fiat-currency inflation. 
The main way Bitcoin is designed to resist inflation is that its supply is limited and known, and the creation of new bitcoin will taper off over time in a predictable way. (There will only ever be 21 million bitcoin, and every four years the amount of bitcoin that is mined is reduced by half.) 
A high inflation rate for fiat currencies might lead individuals to invest more in digital money because the dollars or Euros they placed in a savings account are actually losing value over time. Bitcoin and certain other cryptocurrencies like Ethereum offer investors an alternative. The economics of the Bitcoin market are complex, but there are some features designed into the digital currency that may help it to resist inflation.
* Bitcoin can’t be manipulated by governments adjusting interest rates or printing more money to achieve policy goals. 
* Like gold and other scarce stores of value, the conventional wisdom around Bitcoin is that it should rise in price in uncertain times. (This has not always been the case, however — at the start of the COVID pandemic for instance, it fell sharply along with the stock market.) It’s also a much more convenient way to store and transmit value than gold — it can simply be sent over the internet. 
* Scarcity is one key to making a store of value resistant to inflation. There will never be more than 21 million bitcoin. As of now, approximately 19 million bitcoin have been mined. Around every ten minutes, miners process a new “block” and 6.25 bitcoin are added to the network. (In 2024, the mining reward will drop to 3.125 bitcoin, and will decline by half again every four years until all bitcoin are mined. This mechanism, which is designed into the Bitcoin protocol, is known as the halving.)  
* This scheduled tapering of new supply over time makes Bitcoin predictable in unique ways — unlike gold, no new bitcoin can ever be “discovered.” 






https://www.coinbase.com › learnWhat is inflation? | Coinbase

[1714816123]

1714816123

[1714816123]

1714816123

[1714816123]

1714816123

[Fesatmas]

with the combination of flexibility and stability bitcoin is a very strong reason to avoid inflation. more precisely, it is a protection against a slumping dollar. thus a limited supply makes bitcoin more than gold, albeit by its limited nature. therefore the essence of flexibility is much more profitable without any third party interference.

[Ucy]

Ofcourse. Inflation is simply caused by not having enough goods/services to meet their high demands. 
Printing lots of money and using that to spend on goods/services without producing enough of the goods/services could increase demand and cause their prices to inflate,and the money will likely lose value against the goods and services.

[Argoo]

Ofcourse. Inflation is simply caused by not having enough goods/services to meet their high demands. 
Printing lots of money and using that to spend on goods/services without producing enough of the goods/services could increase demand and cause their prices to inflate,and the money will likely lose value against the goods and services.

It can hardly be said that inflation is caused by a shortage of goods and services. In any case, this is not the main reason for it. The main cause of inflation, as a rule, is the printing of more cash than the increase in the gross domestic product allows, that is, in other words, if much more money is printed than during this time material values ​​that can be in civil circulation are produced.
The general opinion is that inflation in the currencies of states should positively affect the liquidity and price of cryptocurrencies, due to the fact that people will invest in it as a non-inflationary means.

[GeorgeJohn]

Normally inflation is in every aspect of life weather is business or country economy and also in currencies, its obvious that when things Channing's in values or transformed from the initial position to another it's caused by change of environment which in order way it's a inflation, now op, has made it known that these inflation occur when currency losses it values, so I want to state it categorically that what affects fiat currency is likewise to affect cryptocurrency with another strategy, so these inflation is caused by inability to control  our resource

[Darker45]

That was a rather big block of post. Anyway, I have not seen the answer to your question why inflation is important for cryptocurrency. Are you attempting to answer it in your post or are you trying to raise the question to the forum?

For me, I cannot see the need for Bitcoin to undergo inflation, if at all it is possible. After all, Bitcoin is under nobody's control. It could lose or increase its value over time. It all depends on the demand. As for the supply, it is fix. Injections of new BTC are done according to strictly hard-coded rules.

In other words, unlike fiat, there is no such thing as inflation target with Bitcoin. As a decentralized currency which is not in anyway controlled and managed by people, you cannot make plans and execute actions to meet a certain level of inflation with Bitcoin. The rise and fall of Bitcoin's price and purchasing power are solely and freely determined by the market.

[Poker Player]

I think it's the other way around. I think the important question is why is Bitcoin (not crypto) important for inflation. It is just because it is the best weapon we have to combat it. And only Bitcoin, not crypto in general because Bitcois supply is capped, it was designed the opposite of how central banks create money.

[davis196]

* Bitcoin can’t be manipulated by governments adjusting interest rates or printing more money to achieve policy goals.

This statement is kinda wrong.The Bitcoin price is actually pumped by the central banks money printing and quantitative easing.
The governments can theoretically manipulate the Bitcoin price by banning BTC,which will crash the price,or by imposing crypto-friendly regulations that will help for boosting the BTC adoption-which will eventually pump the Bitcoin price.
Perhaps the governments might even start buying BTC,then the price will hit the moon.

This forum post doesn't answer the main question.
Will Bitcoin be valuable in a world without inflation?Answering this question will be way more interesting than repeating the same old "Bitcoin helps for preserving value in times of inflation" mantra.

[Kong Hey Pakboy]

Well, with inflation crypto isn't really affected by the inflation as is but when fiat is inflating, you can get more value out of your bitcoin in the long term but that is the flaw of bitcoin too, when it is not affected by inflation that means that it will not grow in value together with fiat to catch up with the decrease of purchasing power of fiat.

[hugeblack]

The bitcoin price increase is not related to the limited supply of the currency, but to the demand for it for the unique features it provides.
Supply does not control price, but rather the balance of supply and demand is what creates the specific value.

Currently there is inflation in Bitcoin, as evidenced by that we produce about 6.25 Bitcoin with each block and a lot of currencies are produced daily, so Bitcoin has not been tested against inflation.

Printing money makes the poor poorer, but the degree to which governments control it is what determines the amount of that poverty.

[slapper]

Normally inflation is in every aspect of life weather is business or country economy and also in currencies, its obvious that when things Channing's in values or transformed from the initial position to another it's caused by change of environment which in order way it's a inflation, now op, has made it known that these inflation occur when currency losses it values, so I want to state it categorically that what affects fiat currency is likewise to affect cryptocurrency with another strategy, so these inflation is caused by inability to control  our resource

Inflation only happens in centralized asset or fiat because the government always try to print more money to pay the debt, create stimulus or subsidy other countries,  which results as devaluating. The basic theory of everything is the Supply/demand theory. It gives us an idea that a true value of an asset is directly influenced by the participants, for example: the buyers and the sellers. In the free market, such as cryptocurrency, people are free to do what they want and when they believe that the price of bitcoin is too low at the moment, more money is gathered for a rally until it finds a suitable price zone - where sellers believe that the price is too high

We can, actually, discard the inflation but in order to do that, you need to become intimate with the cryptocurrencies, mostly bitcoin. As you can see, bitcoin is countable. The maximum number of bitcoin that can be mined is 21 million. What about cash? The government keeps saying bullshit and then print new money for us. What a waste of resources. Being capped immune bitcoin from the inflation.