With inflation in fiat-based economies a given, experts and even regular people have been looking for an investment or a tool that works as a hedge.
Regarding stocks, they require investors to have sophisticated financial skills and the majority of regular people lack the skill set for being an efficient stock manager.
Inflation refers to rising prices of goods and services, leading to a decline in purchasing power of the local currency.
The Consumer Price Index is a popular metric used to measure inflation, exploring the weighted average of various price baskets of goods and services.
This has prompted people to put their money in store of value investments such as gold, real estate, stocks and, now, crypto.
To be held as a store for value, an asset should be able to hold its purchasing power over time.
A commodity that is supposed to hedge against inflation is expected to rise when consumer prices are going up.
It is still viewed as good enough for holding value in the long term, but for the short term, the metal is seen as less reliable now.
As National Association of Realtors data reveals, sales dropped 13% to 482,000 from the peak of 554,000 in March 2006.
In America and around the world, real estate prices are closely linked with factors like government policy, political and economic stability of the country, local demographics and economy, geographical location and infrastructure, among others.
You need to find companies that have strong fundamentals and are more likely to draw better dividends for their shareholders.
The value proposition of all conventional asset classes is invariably linked to policies of the centralized authorities such as the governments or federal banks.
In other words, 83% of the Bitcoin that could come into existence had been mined within 12 years of the inception of the cryptocurrency.
Inflation happens when the state or the central bank keeps printing the currency notes exorbitantly, resulting in an excess supply of money.
Taking into account of the current supply schedule, Bitcoin’s annual rate of production will be approximately half of gold’s and will continue to go down, making it more scarce than the metal and driving up its value.
With thousands of nodes functioning across the globe, the network is optimally resistant to external attacks that might be seeking to alter its monetary policy, which might put the inherent scarcity of the digital coin in peril.
Bitcoin, however, is immune to such factors as there is no leader to influence and no executive committee to bribe.
It has helped Bitcoin prevent centralized control over information and enable all coin holders the ability to participate in decision-making.
When businesses with interests in Bitcoin attempted to change the block size to allow more transactions per block, individual node operators and developers opposed the proposal vehemently.
Investors view Bitcoin as a tool to beat inflation though the objective of individual investors might be different such as to book profits, grow their wealth or use it as a store of value.