The bad news is that the bitcoin price hike (BTC) over the past decade may have been overvalued due to the associated monetary inflation. Since Bitcoin is usually denominated in fiat currency – usually the US dollar – it is not immune to weakness.

In the decade following the economic crisis, the United States had one of the lowest inflation rates in history, at about 2% per year. However, over the course of a decade, this added nearly 20%. So, if we take $ 2010 as a basis and use the subsequent drop in the bitcoin price, the current price of $ 10,466 is $ 8,770. While this might be a thought-provoking confession to some old scammers, it doesn’t mean that Bitcoin was a bad investment or a bad store of value.

In contrast, if we compare the dynamics of Bitcoin and the US dollar over the past decade (adjusted again for inflation), there is no comparison. The dollar invested in the US dollar will be 84 cents, and the dollar invested in Bitcoin will be worth $ 274,000. Cryptocurrencies are clearly much better at preserving their value.

Bitcoin is also not immune to inflation, but it can complicate matters somewhat. As long as monetary inflation remains low and Bitcoin continues to grow at a rapid pace, as has happened recently, the impact of monetary inflation may be negligible for most investors. The only way to avoid this completely is to stop calling Bitcoin. So maybe ten years from now we’ll be discussing how much Satoshi a dollar can hope to buy.

Source: CoinTelegraph

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