Bitcoin Technology: Deflationary in the Face of Inflation
Inflation is a hot topic at the moment, with the Federal Reserve still peddling its line that any uptick in inflation is just transitory. And Wall Street is buying it hook, line and sinker.
“Supply grows, and the currency is devalued over time. That's typically what we've seen, what we're used to,” according to crypto analyst Alex Benfield.
Bitcoin (BTC, Tech/Adoption Grade “A-”), on the other hand, is deflationary. In this week’s Weiss Crypto Sunday Special, Alex explains:
Bitcoin is a fixed supply: It will never get devalued over time. That is interesting in and of itself, but Bitcoin is actually deflationary on top of that. Not only does Bitcoin have a supply cap of 21 million coins, but coins are also lost over time, so the actual supply of Bitcoin technically is decreasing over time.
And in this time of rising inflation in the legacy financial system and inaction from central banks, Bitcoin’s deflationary nature is especially attractive. Like moths to a flame, many believe that investors will be unable to resist this attractive store-of-value opportunity.
In an interview, Chris and Alex dive into:
• The effect of lockdowns and limited economic activity as inflation sparks up.
• The downtrend of the velocity of money.
• The potential to earn interest that won’t inflate with the U.S. dollar through Bitcoin and other cryptocurrencies.
And more!
As the risk of higher inflation grows, investors need to sort out which store of value offers them the best chance at maintaining their wealth. With crypto, savvy investors can even grow their wealth during periods of fiat inflation.
To learn more, watch the full episode here.
Best,
Beth Canova
Managing Editor
