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?
The government of any country in the world can print money for any reason, so inflation is not uncommon. But Bitcoin is created by solving complex mathematical problems on a special type of computer. Just as the dollar is the single currency of a country, Bitcoin is a digital international currency.
There are about 8 billion people in the world and the supply of Bitcoin is only 21 million. No one can mine more Bitcoins than this. So we can say that it is a hedge against inflation. It is a decentralized institution that no government, bank or large company can centralize.
Many large companies in the world are storing Bitcoin, due to which its price is easily increasing. However, Bitcoin is not a hedge against inflation in the short term, but in the long term. However, just as gold is stable, Bitcoin is also unstable in terms of its price fluctuations.