Bitcoin Is not an inflation hedge in first place

[davis196]

I don't know what Satohi Nakamoto was thinking back in 2008, but I assume that Bitcoin's scarcity and the total 21M limit was supposed to be a "inflation protection" mechanism. Unfortunately, this "inflation protection" mechanism makes the Bitcoin price really volatile.
I agree that the number one purpose of Bitcoin was to be censorship resistant and out of the control from the central banks, governments and corporations. BTC successfully serves this purpose, but the majority of the people don't care about this. They care about making more money and having more food in their fridges. I'm still a little bit skeptical about the Lightning Network and it's ability to solve the scaling problem.
I also don't agree that the underdeveloped countries use BTC as money. It seems like generalization to me. People in the underdeveloped countries can also use BTC as an investment.

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[n0ne]

I don't know what Satohi Nakamoto was thinking back in 2008, but I assume that Bitcoin's scarcity and the total 21M limit was supposed to be a "inflation protection" mechanism. Unfortunately, this "inflation protection" mechanism makes the Bitcoin price really volatile.
I agree that the number one purpose of Bitcoin was to be censorship resistant and out of the control from the central banks, governments and corporations. BTC successfully serves this purpose, but the majority of the people don't care about this. They care about making more money and having more food in their fridges. I'm still a little bit skeptical about the Lightning Network and it's ability to solve the scaling problem.
I also don't agree that the underdeveloped countries use BTC as money. It seems like generalization to me. People in the underdeveloped countries can also use BTC as an investment.

The limited supply make it an inflation protection. This inflation protection isn't functioning in the way it has been developed, but it favours the big Whales. The big bag holders have got the ability to manipulate the market. This doesn't serve to act against inflation. When we talk of gold and other valuable metals. This kind of manipulation isn't possible and that's the reason why people find more secure with gold than bitcoin.

[amishmanish]

I think bitcoin is not a true hedge against inflation as  its will fluctuate against market falls and rises, but it provides a good mean of money transfer, and being in limited supply, many institutional investors are investing in it, and with increasing adoption of crypto and digital currency, we will see that it will become a hedge for funds in future, if not against infalation

[Abiky]

It's simply because it's too early for it to become an inflation hedge. There's a potential for bitcoin to be an actual inflation hedge once adoption is high enough to the point that it will be difficult for it to have price spikes in both directions.

People should be saying "bitcoin could potentially be a good inflation hedge in the future" rather than "bitcoin is an inflation hedge". The latter being false, at least as of today.

Couldn't agree more with you, mate. Bitcoin is still in its infancy. Even though it has come a long way since its inception 13 years ago, there are still a lot of things that need to be improved. The reason why Bitcoin can't act as an inflation hedge now is because the world is still stuck with the Fiat standard. The market is determining Bitcoin's price in Fiat terms. In a pure Bitcoin world (hyperbitcoinization), people would use Bitcoin as the standard unit of account. This means valuing goods and services in BTC (not Fiat) terms.

By itself, Bitcoin is already a stable cryptocurrency. 1 Bitcoin = 1 Bitcoin no matter what. I'm hoping the day will come when Fiat collapses in its entirety, paving the way for Bitcoin to take over the world. If we were used to the Gold standard before, how hard can it be to switch to the Bitcoin standard? Just my thoughts

[Fundamentals Of]

Bitcoin might not have been intentionally made as a hedge against inflation but that idea has slowly taken shape because it has limited supply. And if we compare the available currencies we have, we only have fiat and Bitcoin. And since fiat is unlimited and has been fast losing its purchasing power, it is natural for people to run for refuge into Bitcoin and feel assured that their Bitcoin money is not going to be losing purchasing power over time because there can't be anyone who can add more supply of it.

[Wind_FURY]

bitcoin was designed as a inflation hedge right from the start. the whole purpose was to be deflationary..
the halvings were coded in from the first ever version release
the limited supply was too, as that is calculated due to the halving code to reach the near 21m coin cap.

That's from a view point that 1 Bitcoin = 1 Bitcoin, but from the viewpoint of the people who value Bitcoin in fiat, they've seen it directly that the value of their coins, in fiat, crash from ATH. I believe we should change our thinking on what kind of "hedge" is Bitcoin. It's not a financial hedge, it's a hedge against the decision-making of a cabal of non-elective individuals behind the Federal Reserve.

[DooMAD]

Bitcoin is still in its infancy.

I feel like we have to re-frame that argument a little.  Critics are using it to belittle the community.  They say things like "No one would describe 'Windows 7' as still being in its infancy".  They kinda have a point.  Bitcoin's technology is a battle-hardened, grizzled warrior by this point, although it still receives frequent upgrades.  It's no longer a nascent project, and by describing it as such, we're selling it short.  

Perhaps we need to say something along the lines of "Bitcoin acceptance is still maturing, but the technology is robust"?


//EDIT:  Actually, this is better suited to a new topic to avoid derailing this one.

[BlackHatCoiner]

Bitcoin was supposed to be a P2P electronic cash system, because it was impossible to send cash across a communication channel beyond hand-in-hand before. It was also designed to be resistant to arbitrary inflation policy. Besides the innovative part, bitcoin had also had a political attitude from the very first zeroth block.

But, we don't have to limit ourselves there. Bitcoin works better than any every other form of money, but it also works as a store of value too. I'm here since 2020, and I can tell you that, not only does it have accomplished to retain its value, but I'm also experiencing decent gains. It has managed to be an inflation hedge to me, and even more to those who had the guts to buy and hold before me.

Protection from arbitrary inflation policy has managed to protect me from inflation in general. What's a hedge if that ain't one?

[sbrys]

Bitcoin works better than any every other form of money, but it also works as a store of value too.

Conceptually it works indeed better than any other form of money but it's not really practical I would say ?

[franky1]

Conceptually it works indeed better than any other form of money but it's not really practical I would say ?

practical?
.. what like bank notes
where by to get it you have to travel to a machine miles from home. stick in some plastic. push buttons and hope to get the paper without it exceeding a machine $xxx limit(ATM). or wait for business opening hours to get it from a person who questions you before giving you it(bank cashier) .
 then put that paper into a leather/fabric bound thing to hold it from the elements of weather or risk of it slipping out your pocket.
and then you have to have that bulge in your pocket knocking against your "knackers" all day while you walk around and hope if you want to spend it that the receiver has the right change to give you back.. or that they will tolerate taking large bank notes

in my town. taxi's/ local public buses, dont do cash anymore(or so rarely it surprises them to be asked/handed cash)

bitcoins other role is to be like cash, but deflationary. and without the cash hurdles of having to run to ATM/bank cashiers, without the bank limits on how much they allow you to hold and without the hurdles of the "what if the recipient doesnt accept/have change for"
bitcoin sorts all that out

if you mean practical as in buying stuff..
well i am writing you now with food and drink near me bought with bitcoin..
. its worked for me since 2012

[BlackHatCoiner]

Conceptually it works indeed better than any other form of money but it's not really practical I would say ?

Find me:

• a more efficient and cheap way to send money across the sea, with no intermediaries, in pseudo-anonymous levels of privacy.
• a more efficient way to pay a merchant instantly, with nearly-zero fees, via the internet.

Since trust is eliminated, it's reasonable to become more efficient/practical.

[fiulpro]

You know the good thing is, there are no boundaries which means that as long as you own some bitcoins and use it howsoever you please you got nothing to worry about, you would ofcourse choose the method that suits you the best for me I generally use it as a payment method, but unfortunately odds are against me since most of the times I am unable to get someone to accept it as well so easy to convert it into fiat sometimes. I do think it is not an issue of how bitcoins is being used what's more important is understanding it's volatility and knowing that it is essentially as important as fiat now.

[sbrys]

To be honest I have no issues with wiring money or paying by debt card.

P2P there are even apps thats we can use wiring small amounts of money instantly. Maybe not private but I have no incentive to do this private

Over here we can also pay with Bitcoin in some places but it's mostly always a gimmick converting immediately back to cash.

I'm just speaking from my side of the world but I have no issues paying at zero transaction costs.

That's why I'm saying in concept it's the most democratic/decentralized way of payment but for practical day to day use I prefer cash.

[ChrisPop]

Exactly, most people don't realise it but Bitcoin is doing an amazing job at doing what it was designed to do which is exactly what the OP said. You can send & transfer infinite amounts of money around the world with an insignificant fee. Moreover you can carry that money on an USB drive, laptop or other similar devices while you travel around the world with nobody controlling you at customs.

Moreover it is I'd say it is the most secure decentralized network in the financial world. I'm expecting a good increase in adoption of the lightning network as well. Indeed the poor countries with highly inflationary currencies seem to be the first adopting Bitcoin as a day-to-day transactional currency and not necessarily as an instrument for storing wealth/investing.

[sbrys]

Exactly, most people don't realise it but Bitcoin is doing an amazing job at doing what it was designed to do which is exactly what the OP said. You can send & transfer infinite amounts of money around the world with an insignificant fee. Moreover you can carry that money on an USB drive, laptop or other similar devices while you travel around the world with nobody controlling you at customs.

Moreover it is I'd say it is the most secure decentralized network in the financial world. I'm expecting a good increase in adoption of the lightning network as well. Indeed the poor countries with highly inflationary currencies seem to be the first adopting Bitcoin as a day-to-day transactional currency and not necessarily as an instrument for storing wealth/investing.

Don get me wrong I'm a big Bitcoin supporter as a store of value and admire de decentralized nature but did we really have issues with the things you mention ?

I could already wire infinite (until supplies last ) money around the world. I carry my debit/credit cards everywhere and fees were lower/faster than a bitcoin transaction. It's not that we were carrying tons of bills around in the past.

Again I can imagine it's different in other parts of the world but for me it's not really adding anything to practicality.

[TheNineClub]

Bitcoin was never supposed to be an inflation hedge in the first place. That was an idea built by influencers and speculators in the last years. What Bitcoin was supposed to be and is now becoming is a P2p uncontrollable payment network across the globe.
West world uses it as an investment. Poor countries use it as money, as it was designed. The Lightning Network is dealing with the scaling problem BTC was facing mainly since 2016/17 though it processed slowly far today. countries adopt it you can see clearly ( El- salvador )

The lightning network is the solution to the money problem & scalability problem which world is being faced at the moment. Bitcoin is the solution to the money problems not mainly to the inflation problem.

YES! Finally, someone pointed out what the initial use and idea of BTC was. The laser-eyed when Lambo idiots are giving BTC and crypto a bad name. And it just makes it look like it's a Ponzi. And not to mention the unnecessary forcing of mass adoption just so people can see their portfolio rocket to the stratosphere. This is going to shit really fast...

[_BlackStar]

People should be saying "bitcoin could potentially be a good inflation hedge in the future" rather than "bitcoin is an inflation hedge". The latter being false, at least as of today.

I agree with you, and here are a few things that support that statement in my opinion:
Unlike fiat currencies, bitcoins are: - Source

• Predictable and limited in supply
• Not controlled by a central authority (such as The United States Federal Reserve)
• Not debt-based

So it may be true that there is good potential to expect bitcoin to be a good inflation hedge in the future regardless of the circumstances that favor it. The limited supply and the absence of a controlling authority will very likely allow bitcoin to be a good choice to become one of the future hedging assets.

[aawalker]

If Bitcoin is a hedge against inflation, then why does its price plummet when the Fed announced high interest rates?
Clearly at the current moment it is not a hedge--it is primally an asset in the same way a stock is, and its used as a speculative investment--that's why its price is highly correlated with the stock market. Could this change in the future? Maybe. But what would prompt that?

[aawalker]

Bitcoin was never supposed to be an inflation hedge in the first place. That was an idea built by influencers and speculators in the last years. What Bitcoin was supposed to be and is now becoming is a P2p uncontrollable payment network across the globe.
West world uses it as an investment. Poor countries use it as money, as it was designed. The Lightning Network is dealing with the scaling problem BTC was facing mainly since 2016/17 though it processed slowly far today. countries adopt it you can see clearly ( El- salvador )

The lightning network is the solution to the money problem & scalability problem which world is being faced at the moment. Bitcoin is the solution to the money problems not mainly to the inflation problem.

YES! Finally, someone pointed out what the initial use and idea of BTC was. The laser-eyed when Lambo idiots are giving BTC and crypto a bad name. And it just makes it look like it's a Ponzi. And not to mention the unnecessary forcing of mass adoption just so people can see their portfolio rocket to the stratosphere. This is going to shit really fast...

P2P electronic payments for developing countries with unstable fiat currencies is a good use case for BTC. But for the developed world, and the majority of people in the world, BTC is better suited as a frictionless reserve currency, or a store of value than anything else. VISA already solved the scaling problem without the need of any L2 solution. Plus, BTC's depreciative nature disincentivizes its use as currency and incentivizes HODLing.
It's okay for BTC to deviate from the founder's original goal, things change.

[Wind_FURY]

Bitcoin is still in its infancy.

I feel like we have to re-frame that argument a little.  Critics are using it to belittle the community.  They say things like "No one would describe 'Windows 7' as still being in its infancy".  They kinda have a point.  Bitcoin's technology is a battle-hardened, grizzled warrior by this point, although it still receives frequent upgrades.  It's no longer a nascent project, and by describing it as such, we're selling it short.  

Perhaps we need to say something along the lines of "Bitcoin acceptance is still maturing, but the technology is robust"?


//EDIT:  Actually, this is better suited to a new topic to avoid derailing this one.

Debatable to say if Bitcoin is in its infancy or not from both sides of the debate. Comparing it to an argument, "Windows 7 is NOT in its infancy" doesn't make the argument "Bitcoin is still in its infancy" a wrong one. Both of them are different technologies solving different types of problems. Bitcoin is probably more comparable to early days internet during the 1970s. But the UNDERSTANDING of what Bitcoin is is definitely in its infancy.