One of the popular investing these behind Bitcoin is that it is an excellent inflation hedge.
Once mind, there are only 21 million Bitcoin accessible limiting supply. In principle
Bitcoin's limited supply should make it a suitable hedge against the us dollars growing supply.
Disclaimer, I'm not a financial advisor. The video
is for informational and educational purposes only. Hey everyone. Welcome to crypto trends.
In today's video, we will go over one of the most asked questions about cryptocurrencies.
How does Bitcoin work as a hedge against inflation? So make sure to subscribe to
the channel so you don't miss out on any of our videos. So without further ado, let's get into it.
How does Bitcoin work as a hedge against inflation?
Bitcoin's restricted supply of coins is the fundamental aspect that gives it the potential to
operate as a hedge against inflation. When Satoshi Nakamoto invented the most valuable cryptocurrency
in the world, he included a hard cap in Bitcoin source code that restricted the total amount of
Bitcoins that may ever be in circulation to 21 million. Since that time around 19 million coins
have already been produced, leaving the total of only 2 million to be made. No one is able to
modify the source code of Bitcoin in order to artificially inflate, the currencies quantity.
This would result in the formation of an entirely new blockchain, therefore, because there will
be no surplus of coins available. Those that already exist will eventually become scarce,
which will result in an increase in demand. And as a consequence, an increase in the price
of the asset. In addition, in contrast to gold, Bitcoin can easily be transported. It takes only
a few seconds to send it to the opposite side of the world from where it was first created.
Additionally, anyone who possesses a smartphone and has access to the internet can use it. This
essentially makes it accessible to people who do not have bank accounts
since it was first made available to the public. Bitcoin has also experienced
extraordinarily volatile price behavior. When it was first introduced in 2009,
the price per unit was less than 1 cent at that time. It did not yet exist.
Let's fast forward to the present day when one Bitcoin is currently worth around $20,600,
not to mention the record breaking price of Bitcoin in 2021, which was $69,044 and 77 cents.
But is Bitcoin a good hedge against inflation in principle, it ought to provide an excellent
production against price increases because of this. It is a valuable resource that is in
short supply. It is possible to trade one Bitcoin for another, without any change in the value of
either currency, since Bitcoins are fungible. Additionally, it is not difficult to obtain.
It is well liked by a large number of people and it has been shown to be valued.
However, the price has been extremely volatile because of a number of different variables.
Bitcoin saw a surgeon popularity before the end of 2017, but then experienced a
precipitous decline toward the end of 2018. Also in 2021, it reached an all time peak.
And then the very next year it began a precipitous decline, Bitcoin whales or significant holders
of the cryptocurrency have also been able to control the price of the commodity by purchasing
or selling enormous quantities of Bitcoin. This suggests that speculative forces are the
primary drivers of Bitcoin's price, regardless of whether or not there is now an inflationary phase.
They have the ability to change the price of the asset. One more issue with Bitcoin
is the proliferation of rules that it is currently facing because of legislators all over the world.
This indicates that the value of the asset is frequently at the whim and discretion of various
entities, as well as governments. In addition rules that are overly restrictive of Bitcoin
may make it more difficult for people to use the cryptocurrency, which may result
in a decline in its price conclusion. Although Bitcoin can be a good hedge against inflation.
Several other factors contribute to the price of Bitcoin, not just supply and demand.
So what are your thoughts about Bitcoin? Is it a better inflation hedge than gold? If so,
please explain why. Please let us know your thoughts in the comments section down below
as it would help others. When investing with that being said, here we come to the end of
our video. I hope you like this video. And if so, then don't forget to subscribe to the channel. So
you never miss any video, see you in the next video till then take care. Thanks for watching.