Bitcoin and Inflation and why bitcoin?

[Marvell1]

We are in a time of crisis and I have to say that inflation is so high, it affects everything. A lot of people have been expecting bitcoin to exert its anti-inflation properties, and then things didn't go as expected, assets like bitcoin are not immune to short-term negative effects. I see that many people are starting to be negative and skeptical about bitcoin's ability to fight inflation.

But if we don't just look at the short term but look at the long term, looking to the future. We'll see what bitcoin can do.

+ In 2010: with 10,000BTC we will buy 2 pizzas.
+ In 2016: with 100BTC we can buy a car.
+ In 2022: with only 10BTC we will buy a house, maybe many countries will not need 10BTC to own a house, sometimes only 3BTC to 5BTC.


Just looking at these things, I can tell you that, if BTC is not the best anti-inflation asset, you won't find a second asset that is more inflation-resistant than BTC.

Let's feel for ourselves what is going on in our daily life, is this true? I believe you will have your own final answer.

Fiat 💵 is designed to lose value over time, punishing savers.
#Bitcoin #BTC offers an alternative savings technology, free of debasement.

source pic: https://www.facebook.com/BitcoinBlueWhale.eth/

Fiat is designed to die slowly.

A short history on the slow and constant death of the dollar. 💀
This is why I’m in #Bitcoin #BTC

source pic: https://www.facebook.com/BitcoinBlueWhale.eth/

This is always true if we zoom out and look at the history of bitcoin.


Buy bitcoins before it's too late.

7 years ago 55,000 Turkish Lira got you a Volkswagen.

Now an iPhone 14 costs 57,000TL.

👉Buy Bitcoin before you need it!

https://twitter.com/BTC_Archive/status/1576954888184950785

[Bazzu]

Indeed, if you look at money from ancient times up to now, it is indeed much different in its purchasing power, and indeed it is different from bitcoin, bitcoin was previously low in price, and now the price has increased tremendously. so I personally totally agree if there are people who say that bitcoin is anti-inflation. because we have seen the history of bitcoin price.

[Gyfts]

Inflation's built into fiat currencies by the central banks which seems like a bizarre stipulation that most fiat users don't even think about. It's targeted at 2% yearly under stable currencies. Unstable currencies/economies would only dream of a 2% inflation rate. Losing 2% of your purchasing power year over year is massive, and that's in the best case scenario when the central banks can keep a balance on the economy. If they choose to ramp up the money printer, it'll reach a large multiple of 2%.

For folks that think Bitcoin's fluctuation in price is too much to handle, I'd argue that a guaranteed yearly loss on your purchasing power is worse.

[Sarah Azhari]

+ In 2022: with only 10BTC we will buy a house, maybe many countries will not need 10BTC to own a house, sometimes only 3BTC to 5BTC.

In my country, I can buy a simple house with only 0.5 BTC. it's a bit higher in price than 2021, 0.25 BTC, so with situation I really thing on near future, with only 0.001 BTC I can buy a house, car and some expensive gadgets. I hope and begin to save my btc from signature campaign. Because USA always print the dollar always all they want.

[electronicash]

3BTC can buy a house in my country. maybe even 2 houses if you chose outside the city.
an early investor can look at BTC as a hedge which is really true when we zoom out.  of course for new investors it look different particularly to those who bought at the price peak.

[franky1]

topic creator has it all entirely wrong

bitcoin was not suppose to stay at $75k. that $75k was a temporary bubble of inflation

imagine it this way

in 2021 the "value" (store of value) was $10k so while the PRICE speculatively bubbled upto $75k for just one day. that meant the store of value was  only 16%
yes the $75k was expected to correct

in 2022 the value (store of value) is was $15k
meaning the price of $19.6k is a store of value of 76%
this means when you buy bitcoin now you are locking in alot more value meaning more of your wealth is safe

bitcoin right now is a great time to buy

other assets
ethereum value is (due to pos merge) only $40
so with a speculative price of $1.3k means its store of value lock is about only 3%

gold with a $1.6k price and a $900 value is 56%

so bitcoin right now is a better store of value and deflationary asset
..
the reason why people are not buying into bitcoin right now is simple
fiat is inflating the spread of min wage vs cost of living means that holding fiat is bad. but real world products are increasing in price so people are on a product buying spree before the costs of products increases further. they are hoarding real world products. to invest against net years costs of living

once they have reached their product hoard limit... then they will invest again in assets once they have spare fiat. because yes they wont want to store value in fiat.

[Darker45]

I think those people who seem to have found a weakness in Bitcoin's supposed purpose, which is to somehow avoid inflation, by pointing out that its price is also falling as inflation has gone through roof are not looking at the bigger picture. They're obviously nitpicking. And I think it is very easy to counter, if it's even worth responding to. You know, somebody points out that Bitcoin was $70,000 almost a year ago and is only $19,000 today. Look, that's not the starting point. Just a little over a decade ago, Bitcoin wasn't even a cent.

[$anounimus$]

Since my introduction to bitcoin, I have been interested in this subject. I think the idea of an unregulated currency is very attractive, especially as it goes against how our economy is used to running.

For me, there are two reasons why bitcoin has the potential to succeed in the future
1) because new users want to invest and use the currency;
2) because one day it will be adopted by someone or a group of people who have a lot of money.

The first reason seems more likely because I believe that if more people start using the currency, then others will want to get in on the action although I don't expect this to happen quickly, especially in current conditions it could take a few years. one thing, I feel it's possible.

[m2017]

I think those people who seem to have found a weakness in Bitcoin's supposed purpose, which is to somehow avoid inflation, by pointing out that its price is also falling as inflation has gone through roof are not looking at the bigger picture. They're obviously nitpicking. And I think it is very easy to counter, if it's even worth responding to. You know, somebody points out that Bitcoin was $70,000 almost a year ago and is only $19,000 today. Look, that's not the starting point. Just a little over a decade ago, Bitcoin wasn't even a cent.

You are correct in focusing on the fact that BTC was worth nothing 10 years ago, and that is what needs to be taken into account when revaluing it. Most people compare the last peak value of bitcoin to the current price (which is now low) and draw conclusions from this, which I consider to be the wrong approach. From this position, it seems that bitcoin is a bad tool to fight inflation. In part, this is true if we evaluate it purely in a short period of time. But you need to scale your attention and make assessments considering the whole picture of what is happening, and not a piece of the puzzle, that is, in the long term. In this case, it immediately becomes clear that BTC does an excellent job of compensating for inflation and even more, due to the large profitability in case of holding for a long time (at least several years).

[Daltonik]

Yes, indeed, people perceive inflation in bitcoin subjectively, depending on their entry point, you can imagine yourself as a buyer of bitcoin in November 2021 and then you will probably consider that your funds have depreciated. However, if you look at bitcoin throughout its history, it becomes clear that it is a more inflation-resistant asset and has 1.8% annual inflation, which makes it more preferable compared to fiat money.

[mk4]

If we're making the conclusion that bitcoin is an inflation hedge just because it performed really well, then are high growth tech stocks that performed really well(and similarly as bitcoin) throughout the years also considered an inflation hedge? I don't think so.

[Crazy_Bitcoin]

Buy bitcoins before it's too late.

7 years ago 55,000 Turkish Lira got you a Volkswagen.

Now an iPhone 14 costs 57,000TL.

👉Buy Bitcoin before you need it!

https://twitter.com/BTC_Archive/status/1576954888184950785

This is sad, when people retire thinking they saved enough, then they face this kind of unfair inflation realising it’s the begging of the bad time, People don’t care how much you know until they know how much you care. We want to save as many people from financial ruin as possible.

[Tytanowy Janusz]

Up untill 1637 tulip seeds were also a great inflation hedge?


Because all you (OP) mentioned in your post is a past performance and weakness of fiats. Tulip seeds also performed great for 3 years.

Indeed, if you look at money from ancient times up to now, it is indeed much different in its purchasing power

I did not know that 1971 was "ancient times", when president Richard Nixon ended U.S. dollar/gold peg.

______________________________

Bitcoin is better than gold. Its easier to store, easier to transfer, easier to use, easier to divide even to cents and has better stock/flow ratio which will not change after price pump (gold supply will pump after 10x price pump because it will be profitable to mine gold from sources that were unprofitable before) . That's why it may work as good inflation hedge but not for those who bought the top. And we don't know where real long term value is. It may be at 50k$ and we are way undervalued. It may be at 1k$ and we are way overvalued.

[pooya87]

The problem is that bitcoin price is not decided based on its value but instead it is decided inside centralized exchanges. Considering the fact that the order books aren't that packed inside these exchanges (which makes the market small in comparison to others) and the fact there we have a lot of weak hands who thought bitcoin was an asset and was supposed to make them rich overnight, we can pretty much expect very volatile market where it gets dumped for no reason during times of economical crisis.

But the fact remains that bitcoin is deflationary due to its capped supply and considering that the adoption of bitcoin is constantly increasing the price should go up in the long run and we are currently behind schedule for that rise...

[Aanuoluwatofunmi]

I think there's a need to clarify something here, bitcoin increases value over time and this is not inflation at all but retaining the quality in value with respect to time, inflation hit the fiat economy whereby the same value fiat money had over time is still what it is now, or even depreciated and that's why you discover what one USD can afford buying five years back will now requires about fifty USD in present time, but bitcoin operations is opposite to this just as OP has explained it on the diagrams, bitcoin value increases with time.

[blue_hurricanger]

Diversifying assets in the high inflation and economic recession time is what I expect people would do right now. You want to put some at gold, and some USD at the bank cause of high-interest rates. The rest could be in long-term stocks from good companies.

Bitcoin can also get a fair share amount of what people put their money into diversifying above. It was really a no-brainer move here. As long as they have a stable income and no debt on their name, of course. Cause you can't afford to be leisurely at investing, to be diamond hard when things like debts, make ends meet puts pressure on you and your assets.

[fadhilz123]

I think there's a need to clarify something here, bitcoin increases value over time and this is not inflation at all but retaining the quality in value with respect to time, inflation hit the fiat economy whereby the same value fiat money had over time is still what it is now, or even depreciated and that's why you discover what one USD can afford buying five years back will now requires about fifty USD in present time, but bitcoin operations is opposite to this just as OP has explained it on the diagrams, bitcoin value increases with time.

The value of Bitcoin does increase over time, but you should also note that the increase in the price of Bitcoin is also based on the amount of demand in the market, so it will not always increase if one day the demand for Bitcoin decreases.

Close examples like last year and now where the price of Bitcoin is still rotating at $19K to $20K, while for the highest price last year it was $60K although the price didn't last that long for a unit of Bitcoin, but at least Bitcoin was at that price. So is that also called an increase in value over time for Bitcoin?

[hugeblack]

What you are trying to explain is not inflation but demand effect, so your calculation will not be accurate as the time interval is optional according to the price, you did not measure based on a specific commodity and the focus ignored many aspects, so you are comparing the importance of adoption in increasing the value of Bitcoin more than the fact that Bitcoin as tool to fight inflation.

As for the reason for bitcoin's failure at the present time, it is because of the small market capacity, we are still in the early days and we need a lot of time to rise.

[Mauser]

The funny thing of 2022 is that none of the traditional asset classes protected us from the rising inflation so far. Stocks were hit pretty hard and are down 30% on average, usually stocks can atleast partially withstand inflation pressure, not this time. Bonds were also a bad investment because of the rising interest rates. And even gold the number one inflation hedge back in the day is down considerably from its 1900 USD levels. Investors must have all swapped into cash, what seems as a pretty bad idea with inflation rates at 10%. With that in mind bitcoins and other crypto currencies is one of the few good ideas to protect ourselves from inflation. The price drop we saw over the last several months is giving us good entry prices to top off our holdings. I rather trust in bitcoins than in gold or silver to protect our money from inflation.

[Leviathan.007]

The inflation rate is rising all over the world and that's what we are all sure about it, during the last few years the food price was always increasing and the money we hold is losing its value against many other assets and even the products we needfor our lives, in the other hand the price of bitcoin in uptrend in long and mid-term and this difference between bitcoin price and the inflation rate can be very much surprising for the people who are not familiar with the market and this can be a good chance for the investors to save themselves from the inflation.