I've been trying to understand Bitcoins role in todays economy. Many people describe it as a hedge against inflation, but with its frequent price fluctuations, I sometimes wonder how reliable that claim is.
Now that interest rates are rising globally and liquidity is tightening, is Bitcoin still considered a dependable store of value, or is it more of a high-risk asset?
Id really appreciate hearing from long-term holders how do you currently view Bitcoin in terms of financial stability?
Bitcoin is not a hedge against inflation Bitcoin is the solution to inflation. Its a completely new monetary system and a form of money in itself. If you follow the history of money, it evolved from Rai stones, glass beads, and whale teeth, to metals like gold and silver, then to banks and paper notes, and todays digital fiat currencies. Bitcoin is the next step in that evolution.
Money was invented when people realized they needed a medium for exchange. If I have 100 kilos of apples and you have 10 kilos of fish, you might not want to accept 20 kilos of my apples for 1 kilo of your fish because you simply dont need apples. Humanity needed something universal: a medium that everyone could trust and use to exchange value, and a reliable measure of value itself.
Thats why money also needs to be a store of value, so you can save it today and exchange it for goods or services you want in the future. These are the three functions of money: a store of value, a unit of account, and a medium of exchange.
In the Bitcoin system, there is no inflation the supply is fixed, and over time, prices naturally fall. Bitcoin isnt just another asset; its a monetary revolution.The problem throughout history was that we could never find anything in the physical world that was truly scarce, something that could reliably store value, that no one could simply print more of for themselves. It needed to be portable, divisible easy to verify, and durable because if we chose apples to serve as money, they would quickly spoil. Gold was the closest we came to a solution.Gold was the closest we came to a solution, but it was never a perfect form of money. Some people exploited golds limitations to replace it with banks and paper money. Gold is difficult to transport, verify, and divide, which opened the door for trusted third parties to issue paper claims on gold and eventually, to abandon the gold standard entirely. Thats how we ended up with todays fiat money.
Bitcoin is a superior form of money the first in history to possess all the key monetary properties: absolute scarcity, divisibility, durability, portability, and easy verifiability. For that reason, Bitcoin can fulfill all three functions of money something no previous form of money has ever achieved.