Inflation rate. Why so important?
Inflation, as You know, is a price level increasing. If we speak about cryptocurrency, inflation rate is increasing of coins price. IR is one of the most important coin specifications. So, if you want to invest to cryptocurrency in the long run, you should choose coin with the lowest inflation rate.
The fact is that if a coin has a high level of inflation, the market cap of it will have to increase by the same rate as inflation just for saving the same price of the currency. If the coin does not have inflation, you will always made profits, when the market cap increase by even just a small amount.
Do You know how to calculate inflation rate? As usual Whitepaper includes this information. But if not, You can use this simple formula:
Inflation rate =
Number of new coins per year / Number of currently circulating coins
What about main cryptocurrencies? Bitcoin has deflationary status and a lot of people think that it is a problem. But time shows: for a long-term perspective, deflationary currencies are by far the better option. In bitcoin’s case, deflation will probably cause a rise in value. There is no real reason to think deflation is bad for bitcoin by any means. Interestingly, that some of main cryptocurrencies have decided to go the inflationary way, including Ethereum — switching to proof-of-stake soon and Dash. Other coins, such as Litecoin, have taken deflation model as bitcoin, effectively limiting their supply.
Our currency has very low inflation. With our reward systems, its rate in the long run will be around ~ 2-3% per year.
P.S. If You are interested of those topic, we think You’ll enjoy this video:
