Can Bitcoin Good Option To Hedge Against Inflation?
There are many people who wondering if shopping bitcoin is an option for avoiding the inflation that plagues their country. It might be true that BTC can be used as a hedge against the volatility of fiat currency, but works in a different way from the inflationary currencies.
Inflationary Currencies Vs. Bitcoin
It is not tough to explain the concept of inflation. There are two separate reasons for inflation, there is less demand for the currency or it has a rising supply. More currency will come into circulation in both the cases that mean that the prices are good for goods and services. Usually, the inflation is caused by the central banks in the world of natural currencies. The central banks have continued to print new bills that effectively create money out of thin air.
Bitcoins can’t get manufactured or counterfeit, the value per coin can go down. It looks unlikely that the value of bitcoin goes down to US$ 1 per coin or even less, but it is an option that needs to be dismissed easily. Is there chance that the growth of saving and trading BTC gets outweighed by the number of freshly minted coins? It is the main reason why bitcoin mining having savings of block reward.
People are looking to shop Bitcoins as a hedge against the inflation that has their homework. There is little in shopping BTC if they are feeling that bitcoin will not go anywhere when it comes to the mainstream adoption. It is not an easy feat to find the right balance between the hedge against the inflation and hope Bitcoin go mainstream.
In conclusion, the bitcoins have a great chance of protecting the users against the inflation of fiat currency. However, there is no denying that people should not hedge against the inflation with Bitcoin and started wishing to become rich in a night in that process.