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I fervently hope that hyperinflation never reaches our shores. The likelihood of us avoiding this outcome is extremely low. In other words, our chances of experiencing hyperinflation are extremely high; the only question is when. When will this happen? Many hope it is far away. Some think it’s already here and has been for some time.
US Dollar Inflates Significantly Against Real Estate
Some argue that hyperinflation is already here in real estate. Many Americans (and others around the world) are feverishly overpaying for real estate that, in some areas, nearly doubles house prices in just one year. I don’t mean to be a buzzkill, but no, your home’s value didn’t just double in a year. Your currency quickly inflates against a durable asset like real estate. Are there other signs?
Is Bitcoin an Inflation Hedge?
There are many people who say bitcoin is not an inflation hedge. They point to record levels of inflation last year while the price of bitcoin has either stayed about the same or fallen since November. How is it possible ? ! Well, the only people who try to measure inflation month by month or year by year are central bankers and people who operate with a strong time preference. Is that you? If so, zoom out!
Let’s make a fair comparison between the US dollar and bitcoin from the day they hit parity. Most people, including Bitcoiners, have no idea when this happened. Do you? A quick search reveals that on February 9, 2011, one bitcoin was worth one dollar. We now have a measuring stick for inflation over the past 11 years. Measuring inflation by decade seems like a low time preference way of thinking to me. So what are we learning?
The dollar has inflated considerably against Bitcoin
If you zoom out as I suggest, you’ll notice bitcoin is now 29,000 times more valuable than the US dollar. Seen in this light, I think it’s safe to say that bitcoin tells us a different story than inflation. This tells us that the US dollar is inflating considerably against the hardest form of money ever invented or discovered. Anyone who tries to pretend otherwise doesn’t understand money, the banking system, or our financial system. Oh wait, that’s pretty much all of us.
I take no comfort in pointing this out, but I look up to the morons in government, the press, Wall Street, Silicon Valley, and yes, even diehard Bitcoiners who see inflation through the wrong goal. If your unit of account is the US dollar and you view bitcoin as an investment, then your framing is plausible, if wrong. This may be me delusional, but I think experimenting with a decentralized form of currency that governments, corporations, and billionaires can’t devalue has worked really well since 2009, and I’m sure more than people will discover the blinding flash of evidence this year, and for many years to come.
To all those Bitcoiners who believe they operate with a low time preference and ask yourself why bitcoin hasn’t kept up with reported inflation figures, check your financial blind spot: you are using the wrong unit of account. You suffer from a fiat disease. If your unit of account is bitcoin, the US dollar has been inflating rapidly against bitcoin for the past 11 years. No, it has not been a smooth journey.
No need to panic but news flash: the US dollar has been inflating significantly against bitcoin for some time now. I admit that this reality is a hard pill to swallow. You might want to buy some in case the dollar continues to inflate.
Bitcoin is a savings technology, not an investment
There’s a reason many businesses and people keep accumulating more bitcoin as the price drops. Even framing bitcoin as being in a bull or bear market is completely off the mark as it implies that bitcoin is an investment. There are many people who believe that bitcoin is an investment. I am not one of them. However, if you think of bitcoin as a savings technology, the current season is a time of value discovery for the only digital currency that has been around for at least a decade and has gained 29,000 times more value than the currency. global reserve. You might want to get some just in case.
“Humanity and our world have many problems… bitcoin is not one of them.” –Erin Crawford
This is a guest post by Mark Maraia. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or bitcoin magazine.
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