Inflation is the increase in the prices of goods and services over time. It’s an economics term that means you have to spend more to fill your gas tank, buy a gallon of milk, or get a haircut. Inflation increases your cost of living.
Inflation reduces the purchasing power of each unit of currency. U.S. inflation has reduced the value of the dollar. Compare the dollar’s value today with that in the past.
What Causes the Inflation?
When the total money in an economy (the money supply) increases too rapidly, the quality of the money (the currency value) often decreases. Economists generally think that this money supply increase (monetary inflation) causes the goods/services price increase (price inflation) over a longer period. They disagree on causes over a shorter period.
This being said, the data provided by Coinmetrics.io and tradingeconomies.com allow us to compare the Bitcoin inflation rate to the traditional FIAT currencies inflation. Below we will serve the inflation rates of the United States, China, Germany, Russia, India, Venezuela,
United States – 1.6%
Inflation Rate in the United States averaged 3.27 percent from 1914 until 2019, reaching an
China – 1.5%
Inflation Rate in China averaged 5.18 percent from 1986 until 2019, reaching an all time high of 28.40 percent in February of 1989 and a record low of -2.20 percent in April of 1999.
India – 2%
Inflation Rate in India averaged 6.27 percent from 2012 until 2019, reaching an all-time high of 12.17 percent in November of 2013 and a record low of 1.54 percent in June of 2017.
Germany – 1.6%
Inflation Rate in Germany averaged 2.38 percent from 1950 until 2019, reaching an all-time high of 11.54 percent in October of 1951 and a record low of -7.62 percent in June of 1950.
Russia – 5.2%
Inflation Rate in Russia averaged 122.02 percent from 1991 until 2019, reaching an all-time high of 2333.30 percent in December of 1992 and a record low of 2.20 percent in January of 2018.
Venezuela – 2 688 670%
Inflation Rate in Venezuela averaged 13960.36 percent from 1973 until 2019, reaching an all-time high of 2688670 percent in January of 2019 and a record low of 3.22 percent in February of 1973.
Bitcoin – 0.01%
The current Bitcoin inflation rate is 0.01 percent. The all-time high rate was in January 2014 when it reached 0.038 percent. In December of 1992 and a record low of 0.009 percent in December of 2018.
Bitcoin – the Salvation of Store of Value?
The data above shows that Bitcoin inflation rate is 150 times lower than in China, 160 times lower than in the United States and Germany, 200 times lower than in India, 520 times lower than in Russia and 268 867 000 times lower than in Venezuela.
To conclude, it appears that cryptocurrencies, like Bitcoin, might be a considerable solution to avoid the high inflation rate in our daily lives. Cryptocurrencies have fixed number of coins issued into the markets thus meaning that there is no possibility to issue more coins into the supply.
As an example, Bitcoin has a fixed supply of 21 000 000 BTC and ‘printing more Bitcoins’ will never happen. This makes the asset even more attractive store of value.