Is Bitcoin a hedge against inflation?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

If you've thought recently that everything is getting more expensive, you are not wrong: Inflation - which is the loss of purchase power of your real-world currency, is at decades-long high.

One often heard claim is that an investment in Bitcoin can offset those losses. But is that really true?

First, let's see where this claim comes from. The year was 2008, and governments were printing money to bail out big banks. That drove inflation up high, and Bitcoin was most likely conceived in protest of governments having that ability.

But it wasn't created to defend the Dollar or Euro against inflation. Instead, the idea was to inflation-proof Bitcoin itself by giving it a limited amount of Bitcoins that could ever exist - and no government could mess with that.

That might have worked in a hypothetical world where Bitcoin became the main currency. But the reality is: All of crypto together doesn't even make up for half the value of Apple. Bitcoin isn’t used like money.

And so, instead of becoming our money, Bitcoin is just another very risky asset. And when inflation is high, central banks raise interest rates, which in turn destroys the value of the riskiest assets the most.

You see: Bitcoin and crypto in general aren't just bad at protecting anyone from inflation, recently they would have even accelerated one's losses.

It turns out, the claims are not true - and people just misunderstood why Bitcoin was created in the first place.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.