Bitcoin protects us from inflation – true or false?

Is it true that a lie repeated a thousand times becomes the truth?

Many recommend buying Bitcoin as a cover for inflation. In other words, the inflation of the dollar is usually posed as a problem and Bitcoin is presented as the solution. According to this position, it’s better to have Bitcoin Superstar review than dollars, because Bitcoin retains its value and the dollar depreciates at a rate of 2% per year. The secret lies in the scarcity of Bitcoin and the „infinite“ supply of the dollar. That sounds beautiful in theory. But how does it work in practice?

The „evil“ dollar with its „infinite“ supply is a recurring theme in the crypto community. Everything seems to indicate that inflation is the problem of the moment. And, to make matters worse, the Federal Reserve continues the monetary expansion of the dollar. The situation is serious and all we need is a scarce currency. In the scenario of a scarce currency, money rises in value and people can save.

Inflation is a tax on the poor. Because the dollar is always losing value.

Bitcoin, on the other hand, is a „safe haven“ because it always goes up in value because it’s a scarce currency. If the world adopts Bitcoin, there will be no debt, no inflation, and most of our economic problems will be solved by the efficiency of the free market.

Now, according to this narrative, the smartest way to overcome our inflation problem is to have Bitcoin. However, if we leave Bitcoin Island for a moment, we’ll realize that our island is somewhat eccentric. The first thing visitors would think is that its inhabitants are suffering from some kind of delirium. In other words, they are crazy.

Inside Bitcoin Island, the Bitcoin narrative makes sense, because the delirium is shared. That is, the community speaks the same language and everyone understands each other. However, even the most devout people feel that something doesn’t add up. First of all, what is the inflation? The dollar is one of the most stable currencies in the world. Countries with high inflation use the dollar as a protection. 2% inflation per year is acceptable and offers the perfect time to plan. It is not the end of the world.

No one with their full powers accumulates dollars for a long time as a form of investment. We all know very well that the dollar is primarily a medium of exchange and is designed for commercial transactions. Of course it is not a good idea to use the dollar as a long-term investment instrument. Cash is not a good investment. „Crash is trash. Before Bitcoin and after Bitcoin. That’s why people invest in assets. That’s elementary. Nobody’s going to win a Nobel Prize for saying that cash isn’t a good investment. That’s just a big revelation on Bitcoin Island.

To protect yourself from inflation, it’s best to be cashless. Let’s say we have money and need to make a specific expenditure in a couple of years. That is, we can’t afford to lose that 4% to inflation. The best thing would be to get an option to freeze the price. Or, if that’s not possible, we could buy a financial instrument that gives us a return of more than 2% per year for two years. A triple-A bond could be the perfect solution.

Let’s assume that this supposed expense is a child’s college.

It wouldn’t be a purchase as such. It would be a kind of fund that would guarantee a child’s expenses during his or her college years. We have the money, but inflation could hurt the fund and protection is needed. What are our options?

We could buy a property such as a car or a house. But this would involve a lot of risk, because these markets don’t tend to be very liquid. In other words, there’s no guarantee that we’ll be able to get our initial investment plus 4% interest. We can also go to the stock market and buy Apple or Amazon shares. But we fall into the same trap. While it’s true that this option offers us greater liquidity, the risk is very high because the stock market fluctuates too much to offer real protection.

Now let’s take a look at the Bitcoin option for a moment. My friend Bitcoiner, you’re a staunch defender of the Bitcoin narrative on Twitter and at family dinners. Put your hand on your heart and say you have the guts to tell your wife you’re going to put all of Junior’s college fund money into Bitcoin, because Bitcoin is a scarce currency and is a hedge against the inflation of the dollar, which is an „infinite supply“ currency and will lose its value over time. Can you really? Case closed.