Not everyone understands how inflation works in the real world. If you look at Wikipedia, it states that inflation is the gradual rise in the price of goods, products, and services in a country over a period of time. Simple enough; but does it help?
In order to understand the severity and exponential importance of inflation, we need to define it in more substantial terms.
According to financial and economic experts, inflation takes place when a country’s fiat currency loses its purchasing power. Let us look at the same with an example-
‘One kilogram of raw chicken was earlier available in the market for $2.50. Post inflationary price rise, the same is not available for $3.50. This is alright and no cause for concern if the corresponding income rises too. However, the same becomes tough on normal citizens if income dries up and product prices increase.’
The economic disaster that has been the pandemic has slowed down world economies considerably. Governmental income in the form of taxes, registration fees, and commissions too have come down. This means that governments too do not have a lot of money in their coffers.
However, the adverse financial fallout of the pandemic means that people are without jobs, food, and basic necessities. Democratic governments are being forced to print more money and push stimulus packages to revive and help their populations.
The Fed Reserve continues to print money, which is going to increase inflation. This gives rise to the phenomena of inflation and leads to the debasing of fiat currencies. These levels of inflation are not only likely to continue in the next few months but are going to increase. For more information, you can visit the online trading platform like this App
How Bitcoin Counters Inflation as a Credible Hedge
Some obvious facts to begin with.
Bitcoin is not dead. Neither has the bubble burst nor has it been confiscated by world leaders and authorities.
After we have cleared that, let us now move to more relevant things. The philosophy of Bitcoin underlines its role as a protector of financial wealth for the world’s population. In order to make Bitcoin be safe and free from the financial mismanaged policies of world leaders, Satoshi Nakamoto envisaged it to be beyond governmental control.
Analysts and investors alike have lauded Bitcoin for its anti-inflationary properties. Like Gold, Bitcoin has not only managed to hold its own during the pandemic but register strong growth margins. While this might have come as a surprise to many, the fact of the matter is that this was expected.
It has emerged as a credible inflationary hedge and is being actively pursued by everyone from billionaires to investment firms along with normal individuals.
Will 2021 see Record Levels of Inflation and how will Bitcoin react?
According to the bit qt app, the next few months are going to see record levels of inflation. It is true that economies are showing slow signs of recovery, yet government spending is not slowing down. Vaccinations for the pandemic are likely to come out of government treasuries, which in turn is going to add to inflation woes.
Trillions of dollars of stimulus have already been released and trillions more are pending. The next few months will see a historic debasement in fiat currencies. All this is good news for Bitcoin investors, who are banking on rising inflations pushing Bitcoin prices north of a hundred thousand dollars by the end of 2021.
Many feel that while some countries are likely to suffer the drastic impact of rising inflation levels (Latin America and the African continent) others would escape. However, according to experts, the interconnected nature of the world economy means that inflation is going to affect every country on the planet.
The Final Word
The year 2021 is going to be a watershed one for Bitcoin and other cryptocurrencies. In addition to billionaire investors, government regulators would be watching Bitcoin and its prices. With the market cap now above $500 Billion, there is a sizable interest in how this new digital currency, with a ton of promise, is going to change the world.
HussaiN is a full-time professional blogger from India. He is passionate about content writing, Tech enthusiast & computer technologies. Apart from content writing on the internet, he likes reading various tech magazines and several other blogs on the internet.