How does Bitcoin protect people from inflation?

[Baki202]

But for a long term hodler be it that he buys more Bitcoin or not he still going to make profit while regaining the value of his money after a Bitcoin halving which occurs every four solid years.

Beyond regaining the value of his money, if he leaves his funds there for longer, the induced profits from the price appreciation would compound upon itself and give you bigger profits, then you're not only protecting your funds from inflation, but increasing its value overtime as your funds stays invested in bitcoin. The price history shows a very good illustration to how much value has been preserved in bitcoin for early adopters, there is still opportunity even now for people to take advantage of and protect the value of their funds in bitcoin.

Because of the potential that it has for it to grow and that is why it's a good fight against inflation and that is why it ia more reason why it is more sensible to buy bitcoin every one is becoming wiser because they prefer to invest than to keep the money  the banks because everyone is finding a way to make money just that this one might take a long period of them because investing in Bitcoin with the mindset of making quick money does not work you will have to wait after making profit then you sell.

And the earlier Adopters benefited from the trust they had for bitcoin and since we were not part of those that invested early then nothing have changed we can still invest the most important thing is that we should be able to hold for a long time then we are also going to make profit and that is the most important thing.

[retreat]

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'm curious about the research and institution you mentioned because if they dare to conclude that way, it means that their research was done half-heartedly. If they looked at a short time period, that might be possible, but if they looked over a longer period, then their research would be completely wrong because Bitcoin has already proven that its value keeps growing. That's why you need to look at Bitcoin's growth in the long term, not the short term, so you can really see the actual growth. If it's over a short time, there's too much noise, which can make Bitcoin's price tend to be volatile.

[Franctoshi]

This has a yes or no answer. Therefore, how do you define and rate inflation? Because it all depends on what time frame that you look at, what's the performance of your Bitcoin for at least a year? Let's say you bought Bitcoin in January and in December, does it increase or decrease? Whether Bitcoin protects you against inflation or not basically depends on how you define it.

Generally there's only 21M Bitcoin that will ever exist, so since the supply would decrease, it's natural for the price to appreciate over time. If you want protection against inflation, if it's looked at based on a long-term perspective.

Finally, in the aspect of volatility, which you talked about, yes, because from what we saw in 2022, when inflation smashed 9%, Bitcoin fell about 65%. For this reason, Bitcoin failed as a hedge against inflation, but that was for a short-term period.

However, for the overall perspective, Bitcoin would act as a hedge against inflation.

[Primark]

But for a long term hodler be it that he buys more Bitcoin or not he still going to make profit while regaining the value of his money after a Bitcoin halving which occurs every four solid years.

Beyond regaining the value of his money, if he leaves his funds there for longer, the induced profits from the price appreciation would compound upon itself and give you bigger profits, then you're not only protecting your funds from inflation, but increasing its value overtime as your funds stays invested in bitcoin. The price history shows a very good illustration to how much value has been preserved in bitcoin for early adopters, there is still opportunity even now for people to take advantage of and protect the value of their funds in bitcoin.

Bitcoin investment is quite good and a well-planned job, because if you invest in Bitcoin under the current administration, your money will not be inflated in any way. Rather, your money will be protected from inflation and you will continue to grow your money at a compound interest rate,
Bitcoin investment is so effective that it can certainly be understood if you look at the past price list. Therefore, it is better to hold Bitcoin for a long time, Bitcoin investment is not for those who are afraid of taking risks, but those who take risks are the only investors identified.

I am not dismissing the long-term potential of Bitcoin. However, there is no guarantee that it will grow through compound interest. Remember, you are investing in Bitcoin, not contracting to profit from a guaranteed compound interest. If you keep a fixed interest deposit in a bank, you will receive interest according to its contract. But if you buy Bitcoin today and hold it for 5 years, you will still have the same Bitcoin. If the market price increases in these 5 years, you will make a profit, but there is also the possibility of a loss. Especially if you are forced to sell Bitcoin when the price is low at a time of need. Therefore, it may be realistic to view Bitcoin as a savings rather than as a way to earn compound interest.

[ndutndut]

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.

Bitcoin prices are indeed very volatile and can even drop sharply in the short term even during high inflation which is why many research institutions believe its correlation with inflation isn’t strong enough to be considered a reliable hedge. 

But sometimes these institutions turn a blind eye to what’s happening in the real world. In the real world there are many countries and various fiat currencies, so there are some countries whose currencies tend to weaken against the dollar. This is where Bitcoin comes in offering an advantage to protect value because one BTC remains one BTC and its value isn’t tied to the depreciation of fiat currencies.

Besides, if you look at Bitcoin in the long term investing in Bitcoin since its early days has seen growth far beyond the average inflation in many countries. So holding onto it for years could be a simple way to protect ourselves from inflation.

[Muba20]

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.

Bitcoin is an asset that appreciates in value overtime, so it's the perfect recipe to inflation.

Look at the growth it has made in the past fifteen years, and the huge potential it still has ahead of him, that's a clear indication that Bitcoin is one of the best assets that can be used as hedge against inflation.

In the case of Bitcoin, no one can add new Bitcoins if they want to. Due to a fixed supply, people's demand for Bitcoin continues to increase. Whereas governments print money according to their convenience in the case of fiat currency and subsequently the inflationary effect increases.

Those who have held Bitcoin for a long time have been able to understand that Bitcoin is the only asset that is becoming more expensive over time. If you observe the price of Bitcoin since its inception until now, you can easily understand its truth.

Moreover, since there is no central system in the case of Bitcoin, there is trust among investors of all levels. Although Bitcoin is a volatile currency, it can cause losses for those who invest in the short term, but long-term investors can get more returns than their investment without any stress. Moreover, when the possibility of inflation arises worldwide, the demand for Bitcoin increases even more rapidly.

[Popkon6]

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'm curious about the research and institution you mentioned because if they dare to conclude that way, it means that their research was done half-heartedly. If they looked at a short time period, that might be possible, but if they looked over a longer period, then their research would be completely wrong because Bitcoin has already proven that its value keeps growing. That's why you need to look at Bitcoin's growth in the long term, not the short term, so you can really see the actual growth. If it's over a short time, there's too much noise, which can make Bitcoin's price tend to be volatile.

As time goes by, the price of Bitcoin is showing a more upward trend, if you keep holding Bitcoin for a long time, then you will definitely be protected from inflation. You imagine that the price of Bitcoin will definitely increase in the future, but we have seen from the past that the price of fiat currency is decreasing the further we go into the future, so this situation is created by the government to create money. That is why if you hold Bitcoin for a long time,
you will definitely be protected from inflation, in the long term, Bitcoin holding is the only one that is most effective, which is why more people are getting involved with Bitcoin holding.

[Christopher336]

I don't think Bitcoin can protect people from inflation because it's price is volatile and it can fall even when inflation is high

[ovcijisir]

I don't think Bitcoin can protect people from inflation because it's price is volatile and it can fall even when inflation is high

I think on other hand, that even though there are price fluctuations, it is important to look at long term trend - which is rising. Of course it all depends about how long we are planing to hold our BTC. If you hold it for shorter periods, every price change is important.

But also it is not just about the price, it is also about sovereignity and independence of conventional bank system.

[Yorubek]

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'm curious about the research and institution you mentioned because if they dare to conclude that way, it means that their research was done half-heartedly. If they looked at a short time period, that might be possible, but if they looked over a longer period, then their research would be completely wrong because Bitcoin has already proven that its value keeps growing. That's why you need to look at Bitcoin's growth in the long term, not the short term, so you can really see the actual growth. If it's over a short time, there's too much noise, which can make Bitcoin's price tend to be volatile.

As time goes by, the price of Bitcoin is showing a more upward trend, if you keep holding Bitcoin for a long time, then you will definitely be protected from inflation. You imagine that the price of Bitcoin will definitely increase in the future, but we have seen from the past that the price of fiat currency is decreasing the further we go into the future, so this situation is created by the government to create money. That is why if you hold Bitcoin for a long time,
you will definitely be protected from inflation, in the long term, Bitcoin holding is the only one that is most effective, which is why more people are getting involved with Bitcoin holding.

Of course, the more the government creates fiat currency, the more inflation will increase and this process will happen again and again, which will increase inflation over time. The supply of Bitcoin is very limited, which is why people are investing with a long-term plan and holding it for a long time, as a result, the price of Bitcoin is gradually increasing. The supply is very limited and there is a lot of demand among the common people, so its price will gradually increase, this is a real process. So if we invest with a long-term plan and hold Bitcoin for a long time, we can save our money from inflation.

[salad daging]

I don't think Bitcoin can protect people from inflation because it's price is volatile and it can fall even when inflation is high

I think on other hand, that even though there are price fluctuations, it is important to look at long term trend - which is rising. Of course it all depends about how long we are planing to hold our BTC. If you hold it for shorter periods, every price change is important.

But also it is not just about the price, it is also about sovereignity and independence of conventional bank system.

I think the purpose of many people say bitcoin is able to protect from inflation is for the long term, despite the high volatility, we know how the 4-year cycle of bitcoin can rise many times, by holding more 10 years is even better right?

This is how I think, Bitcoin is getting more and more valuable, fiat is getting longer and longer there will be no price because its value continues to fall due to inflation, so we choose bitcoin to save money.

[sokani]

I don't think Bitcoin can protect people from inflation because it's price is volatile and it can fall even when inflation is high

You are wrong, mate. Volatility is one of Bitcoin's unique characteristic, but you do not have to consider it when looking at inflation. Rather what you should be looking at is the price over the years, which has been appreciating. For instance, in 2010, 1 BTC was $0.3, but today, it's about $84,200, and in years to come, the price will climb further up. So, despite Bitcoin being a volatile asset, it's an inflation hedge and a good one at that.

[Mpamaegbu]

See this instance... If I can buy a Toyota Tundra for $85k today, by 2040, it will definitely cost more due to inflation. But by 2040, BTC will definitely worth far more than $85k and bitcoin value then can comfortably buy Toyota Tundra even amidst the inflation.

So, someone who saved $85k in fiat, withdraws it by 2040 will no longer be able to buy the Tundra while someone whose assets is in bitcoin will buy the Tundra and still have some leftover funds.

Bitcoin maxis will definitely applaud your perspective on that. It's a nice way to see things but then we should also realize that such a view is only idealistic and not realistic. Things don't always move on a straight line like light. Shit happens. What if by 2040, according to your illustration, Bitcoin price dips below the hypothetical $85k? That's highly possible or you don't think it's? Just like real life, Bitcoin also experiences ups and downs.

[Hyphen(-)]

I don't think Bitcoin can protect people from inflation because it's price is volatile and it can fall even when inflation is high

You cannot just asume that based on price volatility, you need to have read about Bitcoin, know how it was created and why, then take your time back to track Bitcoin progress and how it has grown from zero to above $120k as it's all time high price. If you are able to go back and get some information and hint about Bitcoin, you can now conclude and say that it can or cannot protect people against inflation.

Bitcoin is one of the most valuable assets that can maintain its value in the digital space, if you can have chance to meed any Bitcoin holder that has been holding Bitcoin for maybe the past ten years, they will tell you the profit they have made and I don't think there is any investment that will give them that profit. Therefore, learn about Bitcoin first before you make conclusion.

[Popkon6]

I don't think Bitcoin can protect people from inflation because it's price is volatile and it can fall even when inflation is high

You are wrong, mate. Volatility is one of Bitcoin's unique characteristic, but you do not have to consider it when looking at inflation. Rather what you should be looking at is the price over the years, which has been appreciating. For instance, in 2010, 1 BTC was $0.3, but today, it's about $84,200, and in years to come, the price will climb further up. So, despite Bitcoin being a volatile asset, it's an inflation hedge and a good one at that.

If you are looking at the price difference in Bitcoin, you must consider what the price of Bitcoin was like in the past. In the past, the price of Bitcoin was very cheap, and only those who invested achieved success, so you can still take the opportunity to invest in Bitcoin.
Bitcoin plays the most effective role against inflation, because right now if you want to use your money properly and protect your money from inflation, then Bitcoin investment is very effective.
The price of Bitcoin will increase in the future and your money will increase, so you can benefit greatly from this, so I think investing in Bitcoin will be a good use of money.

[Loyang]

I don't think Bitcoin can protect people from inflation because it's price is volatile and it can fall even when inflation is high

You are wrong, mate. Volatility is one of Bitcoin's unique characteristic, but you do not have to consider it when looking at inflation. Rather what you should be looking at is the price over the years, which has been appreciating. For instance, in 2010, 1 BTC was $0.3, but today, it's about $84,200, and in years to come, the price will climb further up. So, despite Bitcoin being a volatile asset, it's an inflation hedge and a good one at that.

If you are looking at the price difference in Bitcoin, you must consider what the price of Bitcoin was like in the past. In the past, the price of Bitcoin was very cheap, and only those who invested achieved success, so you can still take the opportunity to invest in Bitcoin.
Bitcoin plays the most effective role against inflation, because right now if you want to use your money properly and protect your money from inflation, then Bitcoin investment is very effective.
The price of Bitcoin will increase in the future and your money will increase, so you can benefit greatly from this, so I think investing in Bitcoin will be a good use of money.

To understand how Bitcoin protects us from inflation, we first need to understand what inflation is. Inflation is the process by which the same amount of money can buy fewer goods over time. For example, $10 used to buy 3 chocolates, but now $10 can buy 1 chocolate. The decrease in the value of money over time and the increase in the value of goods is called inflation.

So when you put all your money in Bitcoin in the long term, the probability of Bitcoin's value increasing is much higher. For example, Bitcoin's supply is limited and Bitcoin's demand is very high, which can be expected to increase the value of Bitcoin in the long term.

[Chinesebaby]

I don't think Bitcoin can protect people from inflation because it's price is volatile and it can fall even when inflation is high

Inflation is actually a sudden increase in the price of goods and services within the economy of a geographical location, and for the fact that Bitcoin is a decentralized digital asset that is not been controlled by any government, that alone is an edge to your country's currency. Whereby had it been the value of your local currency to dollar was at an equal exchange rate, and instead of leaving the money in your traditional bank, and you invested in bitcoin, and luckily, the price of Bitcoin increased by 20% after year., while that of your local currency devalued by 10% due to inflation. That means you literally would have still had a purchasing profit value of 30% after that one year.

[SPIDERMAN008]

I don't think Bitcoin can protect people from inflation because it's price is volatile and it can fall even when inflation is high

Inflation is actually a sudden increase in the price of goods and services within the economy of a geographical location, and for the fact that Bitcoin is a decentralized digital asset that is not been controlled by any government, that alone is an edge to your country's currency. Whereby had it been the value of your local currency to dollar was at an equal exchange rate, and instead of leaving the money in your traditional bank, and you invested in bitcoin, and luckily, the price of Bitcoin increased by 20% after year., while that of your local currency devalued by 10% due to inflation. That means you literally would have still had a purchasing profit value of 30% after that one year.

Bitcoin is a decentralized asset, so it does not work against inflation. Inflation basically occurs when money is printed in a country without any planning. And due to this free supply of fiat currency inflation increases. And since the supply of bitcoin is fixed there is no possibility of inflation. But the opposite of the example of making more profit during inflation for the increase in the price of bitcoin can also happen. Since the price of bitcoin can also decrease, if the price of bitcoin decreases, then by selling that bitcoin you will get less fiat currency than before. Then it may seem that bitcoin is not working against inflation.

So we need to understand that if bitcoin is considered as an individual digital currency, then its fixed supply will work against inflation. And the thing about price increase as opposed to fiat currency is that if you think about it in the long term, the supply is less over time, people's demand increases so  the price of bitcoin has increased. It is likely to increase in the future as well. Therefore it is advantageous to invest in bitcoin if you hold it for a long time.

[Primark]

The supply of Bitcoin is very limited, which is why people are investing with a long-term plan and holding it for a long time, as a result, the price of Bitcoin is gradually increasing. The supply is very limited and there is a lot of demand among the common people, so its price will gradually increase, this is a real process. So if we invest with a long-term plan and hold Bitcoin for a long time, we can save our money from inflation.

The point you make between the limited supply of Bitcoin and long-term holding is important. Another great feature of Bitcoin is that it cannot be increased at will by any central bank. However, I also need to say that the two issues of having a fixed maximum supply and the increasing price of Bitcoin in the market need to be considered separately. I assume that the new supply of Bitcoin will decrease in the next few years, and at the same time, investor demand will also decrease significantly, so can you guarantee that its price will increase just because the supply is limited?

Therefore, you may agree with me that creating sustainable demand in the market is more important than reducing supply in determining the long-term price of Bitcoin.

[Alexx_123]

You can't really say Bitcoin protect from inflation because of its fluctuations in price. It can rise today and fall. So one must always have this at the back of his mind. We say Bitcoin is protecting people from inflation when it's on bullish.