How does Bitcoin protect people from inflation?

[hd49728]

Thats the factor of bitcoin there is a market volatility, there is a potential for your bitcoin price to up and down thats the cons but imagine the possibility that the value of your bitcoin goes up within just a short period of time with the inflation tons of foods and even services goes up and the value of your money getting down but with the bitcoin we can treat this as an asset that you could potentially gain profit and we know that there is a limited number of bitcoin there is no chance we have over supply than the banks they can print tons of money everyday.

Price is more volatile and more easily to be manipulated than value. Value first, price later is a way how an asset can maintain its new all time high price range a long time, and reclaim it after corrections.

Shitcoins can have price manipulation with very high volatility but at the same time values of such shitcoins won't grow enough, won't be able to catch up with prices, then when manipulations finish purposes and whales leave market, rug the liquidity, such shitcoins will return to where they are, low value, low price together with low trading volume or liquidity.

Bitcoin always reclaims its all time high of each previous market cycle, makes its new all time highs, while most altcoins could not do that. It's strong reason why institutional investors from Wall Street always put their eyes on Bitcoin and invest their capital on Bitcoin first.

[As-Soon-As]

Bitcoin's market price can fall dramatically, even while inflation is high. Research and financial institutions have noted that Bitcoin's relationship with inflation is not strong enough to call it a reliable inflation hedge.

Thats the factor of bitcoin there is a market volatility, there is a potential for your bitcoin price to up and down thats the cons but imagine the possibility that the value of your bitcoin goes up within just a short period of time with the inflation tons of foods and even services goes up and the value of your money getting down but with the bitcoin we can treat this as an asset that you could potentially gain profit and we know that there is a limited number of bitcoin there is no chance we have over supply than the banks they can print tons of money everyday.

The government prints a lot of fiat money due to which the value of money decreases every year (your money remains as it is with you but its value decreases). As a result, people are not getting the right value of money, I could buy a lot of things with 1000 taka ten years ago but now it is not possible. But if I had bought 1000 taka bitcoins 10 years ago then it would definitely be worth a lot now, here we can see the best solution to inflation.
Because Bitcoin is the only one that is most effective against inflation which is proven, if you want to use money properly and want to retain its value in the future then holding Bitcoin is definitely the most important and best plan.

[NewRevelation]

Thats the factor of bitcoin there is a market volatility, there is a potential for your bitcoin price to up and down thats the cons but imagine the possibility that the value of your bitcoin goes up within just a short period of time with the inflation tons of foods and even services goes up and the value of your money getting down but with the bitcoin we can treat this as an asset that you could potentially gain profit and we know that there is a limited number of bitcoin there is no chance we have over supply than the banks they can print tons of money everyday.

Price is more volatile and more easily to be manipulated than value. Value first, price later is a way how an asset can maintain its new all time high price range a long time, and reclaim it after corrections.

Shitcoins can have price manipulation with very high volatility but at the same time values of such shitcoins won't grow enough, won't be able to catch up with prices, then when manipulations finish purposes and whales leave market, rug the liquidity, such shitcoins will return to where they are, low value, low price together with low trading volume or liquidity.

Bitcoin always reclaims its all time high of each previous market cycle, makes its new all time highs, while most altcoins could not do that. It's strong reason why institutional investors from Wall Street always put their eyes on Bitcoin and invest their capital on Bitcoin first.

This is a clear explanation that answers the question of the OP, and I guess he should be satisfied.

When we talk of inflation, it only seems like it has an effect on Bitcoin when the prices drop. But because Bitcoin is a store of value, and the price potentially rising, then the risk of inflation is gone, and value appreciates and adds a lot more. So, if one had let's say $100 worth of BTC, and the value of Bitcoin appreciates, it's clear that the value automatically changes and increases well enough that there is no need to talk of inflation anymore. Bitcoin is really a store of value.

[HajiBagi]

Bitcoin is said to be a hedge against inflation, and that's not just a claim; it's based on Bitcoin's price history, which has increased over time. Don't look at it in the short term, but you need to look at it in the long term because short-term price movements can be volatile and may not reflect its performance as a long-term asset. But if you look at it in the long run, you can see that Bitcoin's price tends to go up. If you want proof, you can check out this picture:


https://bitcoindata.science/dca-calculator

Those who doubt that Bitcoin cannot or is not worth fighting inflation are basically short-term thinkers or those who have invested in Bitcoin for the short term and have suffered losses due to volatility. Because I completely agree with what you said. If we look at the market from the past of Bitcoin to the present, we will see that every person has benefited a lot by investing in Bitcoin and Bitcoin has become one of the best assets to fight inflation.

Many people may say that they will invest in gold, yes they can invest in gold, but Bitcoin has become a much better asset than gold at present and if a person invests in Bitcoin, he will definitely benefit much more than gold if he is able to hold it in the long term.

Bitcoin has been better Gold for years now and no one can argue about it, although bitcoin price can change at any time and that is part of how it works, but when we look at the most successful between Bitcoin and Gold, bitcoin has been the best, people can doubt bitcoin, but those who believe and understand bitcoin will never doubt it, the people who doubt bitcoin are the same people who can't hold, and if you can’t hold your bitcoin for a long period of time to make a good profit, you should not buy or invest in bitcoin, because bitcoin is for people who believe in it and are willing to hold without considering how the market works.

[New Judgement]

bitcoins 10 years ago then it would definitely be worth a lot now, here we can see the best solution to inflation.
Because Bitcoin is the only one that is most effective against inflation which is proven, if you want to use money properly and want to retain its value in the future then holding Bitcoin is definitely the most important and best plan.

If we are being honest with ourselves, bitcoin is not the only effective way against inflation. Remember before bitcoin was invented, inflation was already there. People back then had a way they were protecting their money against inflation. Bitcoin didn’t make those methods obsolete, bitcoin was just another alternative that was added to the already existing methods that investors were using to prevent their wealth from being eaten up by inflation. A good example is Gold and real estate. Gold and real estates were and are still good investment opportunities that help investors fight inflation from wiping out their money.

[Nightwatchmare]

There are people who does not like Bitcoin because they see it as what will remove food from their mouths and make them irrelevant to the society so they are ready and willing to say negative things about Bitcoin so that people could stop adopting it, so you should not believe what the so called financial institutions said about Bitcoin not being strong enough to call it a reliable inflation hedge. Bitcoin cannot be inflation hedge in a short term because the price may decrease but it is inflation hedge when you hold it for a long period of time. For example, if you hold Bitcoin during a bear season to a bull season the value of your Bitcoin could increase by two or three times in price, which makes it inflation hedge.

[Ishicryptic]

Bitcoin's market price can fall dramatically, even while inflation is high. Research and financial institutions have noted that Bitcoin's relationship with inflation is not strong enough to call it a reliable inflation hedge.

I don't understand the point you are trying to make in this thread, regardless of whether there is a strong relation between BTC & inflation, I disagree with your view that BTC cannot serve as a good hedge against inflation itself. The total supply of BTC is set at 21,000,000 & will never exceed that amount. Shouldn't that one factor alone make BTC a good hedging tool?

Bitcoin 21,000,000 finite supply is a strong reason to make it a hedge against inflation for traditional currencies which a central bank can reprint as many times and quantity that they please and remember that anything that can be mass produced can lose it's value over time. Scarce commodities always retain their values and as long as many holders are not willing to sell the value will continue increase because their is a limited supply of the commodity. Bitcoin is volatile so it's value fluctuates but on the long term it's priced value will reach ATH because it cannot exceed the capped 21,000,000 supply unlike fiat which are not capped. Bitcoin would be a hedge against inflation if you are holding it for a very long term because it has potentials to reach ATH.

[Sunshine1525]

(Snip)

Also to correct you last all time high of Bitcoin is $126k, nobody expect to see that figures. But those impossible things happened. So there's lots of possibilities or chance that Bitcoin will reach more bigger figures in future.

Thanks for the correction dude. Yes there's lots of possibilities that Bitcoin would get valuable than the current high, it might have dropped lower than many expected but if we trace back to history, it's not something new that would make people doubt using Bitcoin as an inflation hedge cause it drops and recovers.

We can see that the coin is gradually recovering which means that those who didn’t panic and sell when it dropped from $126k have chances of recovering in the future when it goes higher than $126k. Using Bitcoin as an inflation hedge would require patience, when people are not patient they're the ones who'll think it's not good for an inflation hedge cause of volatility.

[SPIDERMAN008]

bitcoins 10 years ago then it would definitely be worth a lot now, here we can see the best solution to inflation.
Because Bitcoin is the only one that is most effective against inflation which is proven, if you want to use money properly and want to retain its value in the future then holding Bitcoin is definitely the most important and best plan.

If we are being honest with ourselves, bitcoin is not the only effective way against inflation. Remember before bitcoin was invented, inflation was already there. People back then had a way they were protecting their money against inflation. Bitcoin didn’t make those methods obsolete, bitcoin was just another alternative that was added to the already existing methods that investors were using to prevent their wealth from being eaten up by inflation. A good example is Gold and real estate. Gold and real estates were and are still good investment opportunities that help investors fight inflation from wiping out their money.

Many of us misunderstand one thing that is Bitcoin will reduce the inflation of fiat currency. But this is not possible. Bitcoin is a digital financial system, where there is no inflation like fiat currency, there is no central authority, there is the highest security system and its supply is fixed. Here is the main difference that separates Bitcoin from fiat currency. Fiat currency's policy can be changed to increase the supply, but all the rules of Bitcoin is fixed .

In the same way the price of gold remains stable because of the limited supply. The price does not decrease over time. That is why people hold gold as a safe asset against inflation. Neither gold nor Bitcoin will eliminate the inflation of fiat currency, but it is possible to protect your wealth separately without being affected by the negative effects of fiat currency inflation through gold and Bitcoin.

[Baki202]

If we are being honest with ourselves, bitcoin is not the only effective way against inflation. Remember before bitcoin was invented, inflation was already there. People back then had a way they were protecting their money against inflation. Bitcoin didn’t make those methods obsolete, bitcoin was just another alternative that was added to the already existing methods that investors were using to prevent their wealth from being eaten up by inflation. A good example is Gold and real estate. Gold and real estates were and are still good investment opportunities that help investors fight inflation from wiping out their money.

True, actually, but I feel there are more reasons why people choose Bitcoin, and doing Bitcoin does not stop anyone from investing in other assets because there are stocks and more, and all is for the same goal, which is for you to secure your future because when it comes to future security, then you should not have a problem. After all, the only thing you need to do is for you to be committed to buying consistently, because that should be the main goal for securing future investment.

And from the way it is going, the only way that inflation can be beaten is through investment, because that is one of the ways that you will be able to invest properly, and those who are buying and selling do not really have a problem with inflation because they have money going in and out. So you see, these are part of the other ways that you will be able to beat inflation, so that is one of the reasons why we need to consider them.

[Oyoyoma_yu]

Bitcoin's market price can fall dramatically, even while inflation is high. Research and financial institutions have noted that Bitcoin's relationship with inflation is not strong enough to call it a reliable inflation hedge.

The statement that Bitcoin is an hedge against inflation is totally true, the reason is because while your fiat currency, and economic depreciate both on the short, and long term, asset like Bitcoin keep gaining new high, and increasing in value on the long run. In some economy today, the economy in the past ten years is better than what it is today, but the price of Bitcoin today is far higher than what it was in the past ten years, and if you have invested in Bitcoin in the past decade, you must have made very good profit today, but in a bad economy, your money in the bank in the past decade must have depreciated in value. As a newbie it is important you make your research to be able to know the value of Bitcoin, and the reason why it is said to be a store of value.

[yixichloro2xx]

Bitcoin's market price can fall dramatically, even while inflation is high. Research and financial institutions have noted that Bitcoin's relationship with inflation is not strong enough to call it a reliable inflation hedge.

The statement that Bitcoin is an hedge against inflation is totally true, the reason is because while your fiat currency, and economic depreciate both on the short, and long term, asset like Bitcoin keep gaining new high, and increasing in value on the long run. In some economy today, the economy in the past ten years is better than what it is today, but the price of Bitcoin today is far higher than what it was in the past ten years, and if you have invested in Bitcoin in the past decade, you must have made very good profit today, but in a bad economy, your money in the bank in the past decade must have depreciated in value. As a newbie it is important you make your research to be able to know the value of Bitcoin, and the reason why it is said to be a store of value.

What if Bitcoin price also depreciate during those inflation period?  We all witnessed how Bitcoin was hovering around the 60k price range for months, despite Inflation still being a problem. So I can't really say Bitcoin  can be considered a hedge against inflation. Yes our local currency often experience devaluation frequently as a result of policies, conflicts, etc, so holding Bitcoin makes your money appreciate and preserve value against that depreciation over the long term. But it doesn't mean it will appreciate whenever there's inflation. Investing Bitcoin doesn't mean that you will be profitable as there are other factors that can jeopardise your investment, taking reference from the example you gave about people who invested in the past decades.

[Awaklara]

What if Bitcoin price also depreciate during those inflation period?  We all witnessed how Bitcoin was hovering around the 60k price range for months, despite Inflation still being a problem. So I can't really say Bitcoin  can be considered a hedge against inflation. Yes our local currency often experience devaluation frequently as a result of policies, conflicts, etc, so holding Bitcoin makes your money appreciate and preserve value against that depreciation over the long term. But it doesn't mean it will appreciate whenever there's inflation. Investing Bitcoin doesn't mean that you will be profitable as there are other factors that can jeopardise your investment, taking reference from the example you gave about people who invested in the past decades.

Every investment certainly has its risks, but those risks do not mean they cannot be mitigated. The price volatility of Bitcoin is a common problem known to everyone. But how have people still trusted Bitcoin all this time? Because the market ultimately proves that Bitcoin can indeed be used as an asset for hedging. The key lies in your understanding of asset management.

[Out of mind]

Bitcoin's market price can fall dramatically, even while inflation is high. Research and financial institutions have noted that Bitcoin's relationship with inflation is not strong enough to call it a reliable inflation hedge.

Thats the factor of bitcoin there is a market volatility, there is a potential for your bitcoin price to up and down thats the cons but imagine the possibility that the value of your bitcoin goes up within just a short period of time with the inflation tons of foods and even services goes up and the value of your money getting down but with the bitcoin we can treat this as an asset that you could potentially gain profit and we know that there is a limited number of bitcoin there is no chance we have over supply than the banks they can print tons of money everyday.

The government prints a lot of fiat money due to which the value of money decreases every year (your money remains as it is with you but its value decreases). As a result, people are not getting the right value of money, I could buy a lot of things with 1000 taka ten years ago but now it is not possible. But if I had bought 1000 taka bitcoins 10 years ago then it would definitely be worth a lot now, here we can see the best solution to inflation.
Because Bitcoin is the only one that is most effective against inflation which is proven, if you want to use money properly and want to retain its value in the future then holding Bitcoin is definitely the most important and best plan.

The main reason for inflation is that the government of a country prints a lot of money, which causes the value of money to decrease, people earn a lot of money but fail to meet their needs. The price of goods is very high, but due to the decrease in the value of money, they have to face financial shortages. Due to the government of the country printing money, its value decreases, which causes inflation, but when that person invests in Bitcoin, it will do the opposite. Because no government can increase the supply of Bitcoin even if it wants to, its limited supply will increase the demand for Bitcoin and its value will increase.
The money you keep in the bank after a few years, you will see that you could not profit much from it due to inflation, but when you invest that money in Bitcoin, the value of Bitcoin will increase after a few years, then your money will increase. As a digital currency, Bitcoin is the only one that can go against inflation and improve financially, as we can see that big companies keep Bitcoin in their reserves.  So instead of hoarding money, investing it in Bitcoin for the long term will provide financial freedom and high returns in the future.

[Curious T]

It's simple. If you keep your money in Bitcoin, it will not lose value as fiat currency is losing value. What 10 dollars can afford today will be less than what 10 dollars can afford in a year or two, and even worse in four to five years. If that money is kept in Bitcoin, the inflation doesn't affect it. Bitcoin's price being volatile in the short term is not the same as inflation.

This doesn't mean people who hold Bitcoin won't be affected by inflation. They will be affected because when they spend their Bitcoin, the cost of things will still be expensive, meaning they will need to have more money to afford certain things. When they say, "Bitcoin is a hedge against inflation", it mean, inflation don't eat into your savings, like it would have done in fiat.

[Adiljutt156]

Every investment certainly has its risks, but those risks do not mean they cannot be mitigated. The price volatility of Bitcoin is a common problem known to everyone. But how have people still trusted Bitcoin all this time? Because the market ultimately proves that Bitcoin can indeed be used as an asset for hedging. The key lies in your understanding of asset management.

Investments always have their own risks because they always work on both sides, but volatility has never been a problem for Bitcoin because it's always part of this; just because of volatility, people have some chance of surviving in this difficult time because it works and gives some good encouragement for staying on a good level.

Having Bitcoin as long term saving or asset is good because its works good in long run its movement works on positive side and allow peoples to fight while prices are increasing and inflation also increased in this case mostly fiat never give anything to stay on level here few things also needed to be understand just keeping bitcoin never works because having emergency funds and other things also works during prices going decrease and things are also staying no on level.

[Sticky Bomb]

Bitcoin's market price can fall dramatically, even while inflation is high. Research and financial institutions have noted that Bitcoin's relationship with inflation is not strong enough to call it a reliable inflation hedge.

From your perception, you're right, But...Since the price of Bitcoin is not stable, it can't be say that bitcoin will protect people from inflation...The price of Bitcoin changes, it appreciate unexpectedly and it also decreases unexpectedly..so bitcoin can't be say it’s a completely inflation proof...

The protection isn't about price stability, but long-term price appreciation. leaving your money in fiat reduces it's purchasing power and the while the quantity of fiat kept in the bank doesn't generate enough profits to offset the impact of inflation in it, but if the same money invested in bitcoin, even though the fiat is depreciating in value, bitcoin price appreciation gives you some good profit, which would offset the depreciation already experienced in fiat overtime and leaving you in profits as well. So I believe it protects people from inflation.

[GbitG]

Bitcoin's market price can fall dramatically, even while inflation is high. Research and financial institutions have noted that Bitcoin's relationship with inflation is not strong enough to call it a reliable inflation hedge.

Huh that's sounds bit awkward.....!!!!
But it's okay because you are new here..... However let's jump on context... You need to understand that Bitcoin is not the only reference to hedge against inflation and even we can't erase inflation through Bitcoin. We just only used it to minimal the inflation... One more point Fiat are has infinity supply and definitely over the time it will lose his purchasing power and as results it will significantly drop to earth + inflation rate will hike too.

On the other hand we have Bitcoin with limited supply and having no central authority like Fiat was controlled by government and when inflation rise they simply hike rate despite as results currency drope it's value due supply extension but Bitcoin has nothing like that and that's why we believe on it for hedging.

So it is obvious that inflation can cause little drop in Bitcoin but it's up to short period. In long term it's stepping up and up over Fiat.

[Solokan]

Bitcoin's market price can fall dramatically, even while inflation is high. Research and financial institutions have noted that Bitcoin's relationship with inflation is not strong enough to call it a reliable inflation hedge.

Thats the factor of bitcoin there is a market volatility, there is a potential for your bitcoin price to up and down thats the cons but imagine the possibility that the value of your bitcoin goes up within just a short period of time with the inflation tons of foods and even services goes up and the value of your money getting down but with the bitcoin we can treat this as an asset that you could potentially gain profit and we know that there is a limited number of bitcoin there is no chance we have over supply than the banks they can print tons of money everyday.

The price of BTC will always fluctuate, and that's the risk of investing in BTC. However, those who are afraid of the risks of investing in BTC will certainly hesitate to invest in BTC because the risks are high. However, combating inflation certainly requires mental effort and so on. So far, people who have invested in BTC have found its benefits, and their money is certainly not affected by inflation because they put their money in BTC

However, I still think it's better to only invest money you can afford to lose in BTC. It's better to find a side income or expand your business to increase profits and increase profits, so that even during inflation, you can still prosper because you have a large income

With a limited amount of BTC, many people invest their money in BTC to combat inflation, because if money is always increasing, inflation is inevitable

[L E G E N D A R Y]

The protection isn't about price stability, but long-term price appreciation. leaving your money in fiat reduces it's purchasing power and the while the quantity of fiat kept in the bank doesn't generate enough profits to offset the impact of inflation in it, but if the same money invested in bitcoin, even though the fiat is depreciating in value, bitcoin price appreciation gives you some good profit, which would offset the depreciation already experienced in fiat overtime and leaving you in profits as well. So I believe it protects people from inflation.

Truthfully, Bitcoin can potentially increase as well as to preserve purchasing power, but does that automatically imply that it offers a guaranteed inflation hedge? Definitely not.
While fiats can steadily lose purchasing power, let’s not forget that even Bitcoin can also experience a very large decline too, so for someone who needs the money in the short term would still find themselves in a bad position. So I believe the most important factor that makes Bitcoin more attractive and a better option is the time horizon as well as the ability to hold through volatility.