HomeEducationFAQ Is Buying Bitcoin A Good Way to Hedge Against Inflation?Phones Laptops Cameras Tablets Headphones Smartwatches VR Headsets This is my NextShort Answer:Bitcoin is not subject to inflation, but its value can drop or even vanish.On the other hand, if Bitcoin or another capped cryptocurrency were to be recognized as legal tender by a government, it most certainly could not inflate or hyper-inflate.(That could only happen if there were a fatal flaw in the math).Explanation:Inflation is an attribute of a currency with a rising supply or a falling demand.Bitcoin is sometimes used like a currency—That is, it is earned, saved, spent and used to make payments or settle debts.But Bitcoin has not yet been adopted as legal tender in any country.While this is not required to meet the criteria for being a currency, a great many individuals and governments do not consider it a currency.Currently, it is a collectible with a provably limited supply.

It has many properties of a currency: It is portable, fungible, divisible, difficult to counterfeit, easy to transmit, and it’s value floats with demand.Like an antique, equity or foreign currency, it is traded as a speculative investment.Bitcoin is immune from inflation in the traditional sense, because it cannot be manufactured or counterfeit.But, its value can go down.This could happen if adoption is abandoned or if the gradual mining of new coins outstrips the growth of saving and trading.In my opinion, these scenarios are unlikely, but it’s still too early to know for sure.To answer your question, think of this metaphor: There are only a few thousand signed prints by Norman Rockwell and they can be authenticated by curators of the Rockwell museum in Stockbridge MA.Because thousands of collectors and enthusiasts either own some of these prints or desire to own one, they have a value.That value is based on condition and the loss or damage to the overall supply.And so, you might expect that the value will always rise.

After all, you cannot make a new one.But the value of a collectible—even if investment grade—also fluctuates based on trends.Even though the supply of signed originals is limited, these same collectors may become interested in another artist or another medium.bitcoin arbitrage timeOr they may decide that their living space looks better with a fireplace instead of a painting.And, it’s not only users who may exert downward pressure on the value of Bitcoin.bitcoins kostenlos verdienenThere are also problems related to infancy and maturity…Bitcoin and the underlying blockchain are still at an early stage.ethereum next forkThe phenomenon could be derailed by a technical flaw (especially, related to scaling), the ongoing battle for mining governance, a competing coin, or even political headwinds.bitcoin per kreditkarte kaufen

Any of these things could undermine the entire ecosystem.I and the organization to which I belong are among the early adopters and analysts that believe Bitcoin will displace national currencies—with great benefit to citizens, governments and even banks.eta bitcoinAs columnist and pundit, I have argued that the rise of an altcoin is unlikely.explaining bitcoin to your momBut, the long term success of Bitcoin is not yet a slam dunk.Ellery Davies is a frequent contributor to Quora.bitcoin mining pro pdfHe is also co-chair of Cryptocurrency Standards Association and editor at A Wild Duck.Bitcoin is designed with a steadily reducing monetary inflation rate, where new coins are issued with each block mined, and the reward halves every four years.mine litecoin with mac

So, yes, in theory buying bitcoin protects you against inflation.The problem is that the market prices for bitcoin are determined solely by supply and demand.bitcoin island llcBitcoin has tremendous potential for use worldwide, but nobody knows to what extent it will be adopted or what new use cases will emerge.This makes bitcoin prices tremendously volatile.I'm reminded of Will Rogers' financial advice: "Buy stocks.If they go up, sell 'em.If they go down, don't buy 'em".Bitcoin will protect against inflation, and even hyper-inflation, if the demand for it continues to keep pace with (or exceed) the growth in supply.That will only happen if people continue to use it as currency, and if that use spreads (currently utility of Bitcoin is minimal, almost everyone buying it is, to some degree, speculating on future price rises).Bluntly, if Bitcoin falls out of fashion and people stop using it, all the bitcoin you buy will become just as worthless as your national currency will under hyper-inflation.Hence, even if your only goal is to protect against inflation, you have to make your guesses as to whether the risks of bitcoin declining in value are worth the hedge against inflation and/or potential rise in the value of bitcoin.Incidentally, for your "billionaries, millionaires and banks" question, there's a simpler answer.

Wealthy people and institutions generally want more than to just stay ahead of inflation.If they have money, they want to invest it somewhere it's going to make more money for them.Bitcoin has been rising in value, but it's a highly volatile investment, and it's almost impossible to put a reliable figure on how quickly it will appreciate, or whether it will suddenly turn around and collapse.Most wealthy people prefer to put their money in investments that they consider safer.According to the IMF, global debt has reached a staggering $152 trillion and rising.The world economy is currently in the biggest credit bubble in history, which will eventually burst once resources hit a point of market saturation.Most financial markets are intricately tied to the political whims of central banks, yet hard assets like gold, silver and land can act as a hedge against a pending crash.While these options can act as a store of value, they are not as liquid as cash, nor can they facilitate global trade.

Negative interest rates disincentivizes people from saving fiat currencies, which could lead people towards using alternative forms of cash like Bitcoin.According to Bill Gross, a billionaire bond manager, Bitcoin has the potential to counter central banks.Many people within the legacy system are critical of negative interest rates and quantitative easing, yet the fundamental problems are rooted at a much deeper level.The entire economic credit structure operates like a convoluted Ponzi scheme, and requires an overhaul from the ground up.The history of banking goes all the way back to goldsmiths who issued out receipts for physical gold stored in their vaults.The gold was kept secure and the receipts were traded as the first paper notes.Rather than being satisfied with collecting fees for storing gold, these early bankers decided to start lending out gold and charging interest.Once the habit of trading paper receipts became the norm, these crafty bankers decided to lend out more promissory notes than physical gold held in reserves.

This scheme worked perfectly until people caught on and tried to withdraw their gold deposits at the same time.This is called a run on the banks, which renders the entire scheme insolvent.Compare this simple model to that of an illegal Ponzi scheme.Ponzi schemes pay old investors dividends from money coming in from new investors.The very nature of a Ponzi scheme is to create debt obligations that can only be paid with new money coming in.The reason why Ponzi schemes fail is because they are based on a false presumption that there are an infinite amount of new investors who can be recruited.Once the scheme hits market saturation (based on a finite population), the entire thing implodes.Fractional reserve banking operates in a similar capacity by creating new credit (money) to pay the interest on old debt.If a banker lends out 10,000 pounds of gold yet only has 1,000 pounds stored in a vault, how are borrowers suppose to pay off the interest?The goldsmith will end up accumulating more gold as interest payments but the scheme is based on a false assumption that gold is infinite.

It’s not mathematically possible for everyone to pay back the loans, so just like a collapsing Ponzi, the majority of participants at the base level will end up bankrupt.After several major bank runs and economic depressions, governments decided to create semi-private central banks to regulate the money supply.These central banks were created to prevent bank runs by becoming “lenders of last resort”.Rather than stopping this fraudulent scheme, governments and banks decided to remove the gold out of the equation entirely.This gave them the freedom to expand the credit supply without needing to worry about reaching saturation on the gold market.Since many governments were already indebted to private banking cartels, this scheme was legalised and spread to most jurisdictions in the world.Fractional reserve banking allows private banks to expand the credit (money) supply, by issuing out more loans than cash deposits.The only problem is that it’s based on a delusional model of perpetual economic growth, which requires an infinite amount of natural resources to keep the scheme alive.

The expansion of global credit has helped stimulate economic growth, which increased technological innovation and raised the standard of living for first world countries.Money has streamlined commerce to the point where the average person in our western civilization doesn’t have to toil all day to farm for food.The dark side of fractional reserve banking is that resources are limited and therefor humans must compete more aggressively to keep their slice of the pie.Perpetual economic expansion means that corporations must always sell more products, deplete more resources and encourage waste.It’s no longer economically feasible to create products that last a lifetime.Instead we’ve built a wasteful consumer society that revolves around planned obsolescence.When the resources run dry in certain jurisdictions, governments need to intervene on behalf of their corporate allies and wage war to take the resources of others.Confessions of an Economic Hitman is a first hand account of warfare being waged through bad loans, assassinations and military intervention.

Like all Ponzi schemes we’re hitting a point of market saturation, where our entire system may be on the verge of collapse.Our economic debt bubble is actually worse than a traditional Ponzi scheme, because it leaves a trail of environmental destruction that can drive us to the point of extinction.Governments and central banks are desperately trying to keep the credit scheme alive through a variety of tactics such as bail-outs, bail-ins, negative interest rates, quantitative easing, capital controls and a war on physical cash.Bail-outs:  When banks and major corporations start to fail, governments create more debt/money to rescue them.The burden is then passed on to the taxpayer.When financial institutions fail, bond holders and uninsured deposits take a haircut to keep the company solvent.Negative Interest Rates: Central banks charging commercial banks a fee for keeping cash reserves.This cost can be passed down to the consumer, penalising people for saving money.Negative interest rates are suppose to encourage spending and loans to stimulate economic growth.

Quantitative Easing:  Central banks Increasing the debt/money supply to flood the financial markets with liquidity.This newly injected capital is generally used to purchase securities off the markets to stimulate economic growth.Capital Controls: Governments and central banks restricting the flow of foreign capital in and out of a particular jurisdiction.Countries that devalue their currency often force their citizens to baghold the depreciating money, by restricting capital flight.Restricting the use of physical cash as a means of maintaining economic control over individuals.Cash provides the benefit of anonymity as well as hedging against bail-ins and negative interest rates.There is more digital credit than cash on hand, so banks discourage large cash withdrawals.People who withdraw large sums of cash are often treated like criminals and reported to the “authorities”.Civil forfeiture allows police to confiscate cash without explanation or criminal charges.Run a fractional reserve Ponzi scheme for several centuries and the end result is a $152 trillion debt bubble, and a global empire rooted in systematic debt slavery.

Black’s Law dictionary defines slavery as: “1.A situation in which one person has absolute power over the life, fortune, and liberty of another.The practice of keeping individuals in such a state of bondage or servitude.” Modern day slavery can take on many forms, such as the overt slavery that exists in third world sweat shops, or the subtle “free range” financial slavery of the privileged classes.In 2015, the average American household debt reached $130,000.On top of that, inflation slowly erodes our savings by about 2-3% per year.Factor in the interest accrued on all debt and the average citizen spends their life perpetually running on a hamster wheel of wage slavery.Black’s Law Dictionary defines employment as: “1.The relationship between master and servant.” It defines master and servant as: “The relation between two persons, one of whom (the master) has authority over the other (the servant), with the power to direct the time, manner, and place of services.” It’s also interesting to note that the words “bond” and “bondage” have the same roots.

A bond is a debt instrument that represents a promise to pay money or do some act.The word bond can also be used to describe physical restraints used to hold someone down.The term bondage is another word for slavery.A system built on a foundation of debt will treat its subjects like property.Our financial lives are subjected to: Centralization of power has a tendency to corrupt.The global economic system consists of multiple layers of centralization that concentrates power amongst an elite banking cartel.Commercial banks are controlled by semi-private central banks that have a certain degree of autonomy.These central banks are all controlled by the Bank for International Settlements.Then there’s the World Bank, which lends money to developing nations, creating debt obligations as a means of controlling their natural resources.The International Monetary Fund is a pool of capital used to lend liquidity to nations in emergency situations.While some of these institutions claim to bring stability and fight poverty, the actual results show an accelerated concentration of power and wealth.

The very nature of Ponzi and pyramid schemes consists of concentrating wealth at the top levels.The majority of participants stay at the bottom level and have the least amount of wealth.Right now, 1% of the world’s population controls around half the wealth.Some would have you think this is the difference between high vs low achievers, yet given the centralized pyramid structure of our economy, it’s actually mathematically impossible for the majority to get an equal share.If money is created out of debt, the interest makes it so that there’s never enough money in circulation to pay off the principal obligations.It’s a game of musical chairs where the majority of participants will never have enough money pay off their debts.Financial pyramid structures fail because the bottom level always comprises of the majority.Unlike centralized pyramid structures, decentralization consists of distributing power amongst individuals within a network.Decentralization is a self-selecting meritocracy, where individuals can choose to contribute to the ecosystem based on their abilities.

Usury is a system that always takes more than it gives.The debt based economy is a parasite that will consume all the world’s resources until it kills its host.The best way to kill a parasite is to starve its food source.Rather than trying to fix a sinking ship, you can choose to withdraw your energy and your consent to feed an alternative model.Choice is the first step towards liberation.Bitcoin and open-source blockchain technology is a potential remedy for individuals to transcend financial slavery.Satoshi Nakamoto created Bitcoin as a global monetary network that can bypass financial institutions, and operate without the permission of trusted fiduciaries.Cryptocurrencies can help boost financial liberty for several reasons: Liberty requires taking personal responsibility for your actions.We are all players in this game who are responsible for the final outcome.The solutions will not come from a top down approach, so do not beg your captors to set you free.With cryptocurrencies you are 100% responsible for keeping your money secure, while conducting due diligence on all your financial interactions.