Can Bitcoin Act As a Good Inflation Hedge? My Take On Using Bitcoin To Combat Inflation
There are a lot of questions out there about whether or not Bitcoin can be used as a good inflation hedge. I believe that it can, but let’s take a closer look at the data to see if that is really the case. Inflation is defined as the rate at which the prices of goods and services increase over time. It has been increasing rather significantly over the past several years especially, and as of the last report for March inflation, we have a current inflation rate of 10% given the massive spike in housing, rents and gas that we have seen so far. This is a rather concerning number because it means that the prices of goods and services are rising faster than our incomes, which makes it harder and harder to make ends meet. The government tries to combat inflation by raising interest rates, but this often has negative consequences such as higher unemployment. And so in this article, can Bitcoin act as a good inflation hedge? My thoughts and opinions on this blog post below.
So what can be done about it? And What We Say About Bitcoin As An Inflation Hedge At Inflationhedging.com
One of the scariest statistics that I have ever read is the fact that average income in the United States was something like $50,000 per year back in 1980. Since then, inflation has increased to the point where goods and services are about 3.5x more expensive than they were in 1980, but that incomes have stayed practically the same! Incomes do not rise to meet inflation, which means when you see Inflation at 10% annually, you have got a serious problem on your hands.
What this means is that if you had $1,000 in 1980, it would be worth $250 today. If you had $10,000 in 1980, it would be worth $2,500 today. This has a serious effect on the middle class, as they are the ones who are being squeezed the most by inflation.
Bitcoin, while not necessarily the wisest investment for making this happen, can serve as a valued inflation hedge on your money. With what I think will be significantly higher than stock market returns over the next 8 to ten years, to the tune of 25% annually versus a 6% annualized return on the stock market, yes this can most definitely serve as a great Inflation Hedge for the time being.
How Bitcoin Can Serve As a Great Defense Against Inflation, And Why Jordan Peterson Just Bought Bitcoin
Inflation is a very real problem that is affecting economies all over the world. It has a particularly serious effect on the middle class, as they are the ones who are being squeezed the most by inflation.
Bitcoin, while not necessarily the wisest investment for making this happen given its volatility, can serve as a valued inflation hedge on your money. Jordan Peterson picked up on this when he did a podcast interview with someone deeply involved in the Bitcoin space, and it’s something that I think is worth exploring.
Final Thoughts On Can Bitcoin Act As A Good Inflation Hedge? My Take
The key issue with inflation is that it destroys the purchasing power of money. This is because, as the money supply increases, each individual unit of currency becomes worth less. Prices for goods and services increase, but wages don’t always follow suit. My recommendation would be to put something like 10% or so of your portfolio, into Bitcoin and other Crypto Currencies via legal, stock exchange registered ETFs on the NYSE, over the next 8 to 10 years, you likely will not be sorry that you did. With the massive volatility of Bitcoin, and given how high inflation currently is in the United States, I would say that it is almost crazy not to buy Bitcoin, and that it may just be the best defense against Inflation that we have.
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