How Inflation Affects You? Can Bitcoin Save You From Inflation?

Feb 25, 2022

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Inflation is a significant cause of rising living costs. It’s been rising steadily for many years. However, the recent increments in global CPI show that Inflation is now floating over 7%. The number is quite devastating and more than enough to trouble every mind. This subsequent surge in inflation highly affects the standard section of our society. It means that a dollar today will only buy you 92 cents worth of goods next year!

Cryptocurrencies can provide an escape from these worries! Bitcoin has been proven to have a 1-2% inflation rate per year, meaning that the bitcoins you save today should be worth about as much next time you go to spend them. While bitcoin should be good for saving money from Inflation over a long period, it isn’t without its shortcomings. For starters, it might be too late to invest in bitcoin because you missed out on buying it at the very beginning of its rise.

Why Is Inflation Bad For You? 

By Inflation, I mean the increased supply of dollars over time. An excellent example of this would be if you’re using a dollar bill and that dollar’s value decreases due to Inflation. For example, imagine getting steadily less worth every time you paid for something with your dollar. When you spend your dollars later, they will not be as helpful, and, likely, the money in the bank will not be worth as much either. Now, Bitcoin has the same amount of money per year compared with fiat (i.e., ‘regular’ money), but it’s created at a slower rate. This means that your money will be worth just as much, and you don’t need to worry about it.

Why It Is Vital To Tackle This?

It’s simple: by using Bitcoin instead of fiat, you can effectively protect yourself from Inflation! Over the last ten years, many people new to cryptocurrencies have bought bitcoin cheaply and then held onto them as they increased in value. So, let’s look at an example. In this scenario, where each fiat dollar is worth as much as 1 Bitcoin, you can effectively use your saved money to buy your goods. It simply means that you don’t need to worry about Inflation eating away at your money and can focus on saving for the future instead! 

Bitcoin can prove a real asset to save your investments in the future. For example, you can invest it in a business or use it to make purchases online. This can be the easiest way to cope with highly increasing inflation because Bitcoin has a limited supply of coins. This is what makes them untouchable from the negative impacts of inflation. With time, while the number of dollars or other fiat currencies keeps on multiplying, the total number of Bitcoin in the market will remain constant at the same number.

What Makes Bitcoin Perfect Choice As A Inflation Hedge?

Bitcoin is the perfect choice for a hedge against Inflation because of its limited supply. This means that the supply of bitcoin can be controlled and maintained at a steady rate, therefore preventing sudden and unexpected changes in price. Certain qualities account for Bitcoins’ potential to work as an inflation hedge. Some of these qualities include

  • Bitcoin has a limited supply. Even though bitcoin creation has increased over the last few years, it capped at 21 million. Therefore, the maximum amount of bitcoin that can be made would only be 21 million, while fiat money can make more! Therefore, the supply of bitcoins will remain stable and not suddenly spike up to a much higher number.
  • The inflation rate is controlled in Bitcoin. Bitcoin has an inflation rate of only 1-2% annually instead of fiat’s 7%. So if you hold onto your bitcoins, there is no chance you will lose all your money due to sudden price increases. You can stay in touch with these details at this site .

Inflation is a big issue for many of us. It can destroy your wealth and make you feel powerless when it destroys your cash value. By using Bitcoin, you can effectively protect yourself against Inflation. In addition, by using Bitcoin, you will be much better off than using fiat, which will only give you an insignificant fraction of what bitcoin can give.

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