Bitcoin is a terrible inflation hedge. This is quantitaitvely demonstrable over its entire existence. It's a good gambling asset, and in my opinion, should be taxed as such.
You are completely ignorant. I'm not saying that in a mean way, I mean it in the purest sense possible: You have no idea what you are talking about.
According to the graph below, BTC goes up when inflation goes down. That is the opposite of a hedge! It proves that Bitcoin is not valuable due to "not having sound monetary systems."
Bitcoin is obviously a speculative asset whose value goes up when inflation is low and people have money to spend on speculative assets. The fact that we use 2.3% of our nation's electricity on it is unjustifiable.
> https://charts.woobull.com/bitcoin-inflation/
That graph is charting BTC price to BTC supply inflation, not general economic inflation (which is what I'm talking about).
Could you please refer me to a graph showing the relationship between BTC and inflation? Because inflation over the last 12 months is relatively low, at 3.4%, while BTC is very high, at $47,621. Then again, BTC hit a high of $65,000 back in November of 2021, when inflation rates were indeed high at 6.8%.
This seems to suggest a weak relationship at best between BTC and inflation rates.
You might lose 30% of your value, but hey, you didn't lose that 3.2% to inflation!
Are you implying that BTC is a "sound monetary system"? Because many people will argue with that.
Bitcoin is neither an alternative to the international monetary system, nor a hedge. It's a joke. A gambling instrument for financially illiterate people.
Obviously it is functional, I never said it wasn't!
Inflationary systems have a lot of benefits -- they encourage consumption, erode the value of debt over time, etc. But there are downsides, too. Savings and purchasing power are destroyed over time. They encourage investment in hard assets like real estate and BTC to protect wealth. And so you get some waste, too. There is no free lunch.
As far as bitcoin being a hard asset, this isn't entirely correct either. Not only does bitcoin not generate income, but it consumes income. You see, the bitcoin network is extremely expensive to maintain, and the owners of bitcoins are the ones who bear the cost. Either they pay with fees -unlikely-, or they'll pay by losing value in their investment -most likely. There's no way around it.
The adoption of fiat currency by many countries, from the 18th century onwards, made much larger variations in the supply of money possible. Since then, huge increases in the supply of paper money have occurred in a number of countries, producing hyperinflations – episodes of extreme inflation rates much greater than those observed during earlier periods of commodity money.
So it's just a matter of time when citizens loose trust in fiat currency and start looking for other solutions, like decentralised cryptocurrency.
When you cannot make living from money that you get from your hard work, naturally, you are forced to look at alternatives. As more people adopt cryptocurrencies, the less value traditional currencies had and eventually ignores inflation. Which, for now, bitcoins does. It just isn't that much popular yet.
No one would expect ten years ago that some cryptocurrency would survive or be adopted by more and more people. But somehow, it's still there and grows every year.
If crypto wouldn't be a thing, there wouldn't be plans for digital Euro by ECB for example. Basically same thing as BTC, except with regulations with centralized bank.
To be clear, I'm not a fan of digital currencies. Cash is still most private and free way of exchange method. For digital, you need electricity, device and data which many cannot afford to have.
What do you think should happen?
Offer some substantial, falsifiable, claims/arguments/etc.
Do they think people would continue to use the metallic ore gold as their currency, and they would just accept the insane inflation? And the fact that 99.9% of the world's wealth is now concentrated in the hands of one person?
Or do they think we would rapidly switch to a different commodity as our currency?
Also, why should anyone respond? Because they think the topic is interesting. I thought that would be clear. If you cannot imagine the nightmare scenario and you need "genuine writing effort" for you to imagine it, then it sounds like you don't think the topic is interesting. Maybe just let other people hash it out.
It doesn't add any value to the discussion to speculate on such remote possibilities far into the future.
It kind of is!
But honestly that's the price we pay for not having sound monetary systems. At this point BTC is, functionally, just an alternative asset that hedges against inflation. As governments print increasingly more money, and the amount of BTC stays the same, each BTC becomes worth more. It's very simple. The demand for such an asset is apparently quite high; high enough to spend up to 2.3% of total US energy.
If the world operated on non-inflationary systems there would perhaps still be a small need for BTC, such as providing liberty in committing financial transactions, but I doubt it'd be nearly as big as it is today on that basis alone.