Is Bitcoin an Inflation Hedge?
Well, it depends…
In June this year, US inflation reached a 40-year high of 9.1%.
Other countries have seen similar moves with Argentina experiencing an eye-watering 70% inflation.
Bitcoin advocates have argued that one of its benefits is protecting people against inflation. In this post, I examine if this is true.
What is inflation?
Inflation is an increase in the price of goods and services within an economy.
For example, if the average price of a car in 2010 was $28,160. It is now around $48k. The difference can be accounted for by inflation.
Inflation is formally calculated using a weighted average price change of a “basket of goods” representing the typical things people buy.
The important thing here is that inflation figures represent the rate at which prices go up. It is often therefore called year-on-year inflation.
The impact of inflation
Some inflation is good for an economy. Governments often aim for a figure of around 2% in order to stimulate…
