can Bitcoin save you from inflation. Bitcoin's fans love
the idea of using Cryptocurrency as a hedge against hyperinflation
. In fact, the original white paper which serves
as the founding document for the whole asset class,
specifically talks of a phase when no coins will be
created and it will become inflation free. But is
this really possible? Can Bitcoin truly abolish the cycles
of hyperinflation in human history that see money returned to
the value of the paper they printed on in places
as diverse as Germany, Zimbabwe and Russia. Will
it protect you if the price of bread is paid
in a wheelbarrow full of bank notes? So far
? The evidence is contradictory on the one hand,
but points price has almost no correlation with the market
based measures of inflation expectations. For instance, while
gold and known inflation hedge has a near perfect relationship
with US bonds to track inflation, Bitcoin does not
, and while gold still buys the same amount of
stuff as it did in the days of ancient rulers
of Babylon Bitcoin has only been around for a little
over a decade. On the other hand, for
the brief period that Bitcoin has existed, its purchasing
power certainly has risen. Yes, there were periods
of spectacular crashes where its value measured in US dollars
collapsed, but over time, those who held onto
the Cryptocurrency rather than actively trading it were able to
buy more and more with it. In 2013 1
Bitcoin bought about half a barrel of oil In 2017
, it brought 300 last year you could get more
than 1000 barrels for a single Bitcoin. Now,
economists might warn that at a macro level that's deflationary
and counterproductive for investment and growth. But for those
holding Bitcoin, it was obviously a great result.
The jury is still out on whether this will remain
true in the long run, but until now,
at least Bitcoin has proven a great store of wealth
, even as it failed to purely hedge inflation.
I'm Eddie van der walt. This is decrypted for
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