The decentralized cryptocurrency Bitcoin is considered one of the trustworthy cryptocurrencies in the market. There are many cryptocurrencies, but not all are worth the time or the money. If times of turmoil Bitcoin can be a safe port to park part of your money because Bitcoin is a hedge against inflation. Bitcoin is capped at 21 million Bitcoins. If this would apply to a central bank or a treasury, the institution would not be able to print more money. We have not reached 21 million quite yet. Bitcoin is also pre-programmed to cut the pace of supply expansion by 50 percent every four years.
Many experts believe that the result of such pre-programmed reduction in supply is a sign to buy. This means that whenever there is deflation or an economic collapse, it is a sign to buy Bitcoin. There have been many collapses lately. We have seen the oil price crash and the unemployment numbers have sky-rocketed due to the coronavirus outbreak.
In times of deflation, people rush to the dollar. The dollar is a good currency to have because it stays strong. It is a trustworthy currency. That again is a good sign for Bitcoin as people with cash, and with cash in dollars, tend to use them. In a deflation people with cash get more for their money than people without cash due to the reduction in the value of things. Bitcoin is a place to put value.
The uptick in the purchasing power will likely draw greater demand for bitcoin, as the cryptocurrency is already used as means of payment. The cryptocurrency’s appeal as a medium of exchange is likely to continue strengthening with the growing prevalence of technology in consumers’ everyday lives caused by the coronavirus pandemic.
Bitcoin has always been seen as the gold of the internet because it has many of the same characteristics. Gold is spare. There is not much gold around. When something is limited, and cannot be produced, it is easiser to use it as a measure of value. Like the yellow metal, the cryptocurrency is durable, fungible, divisible, recognizable and scarce. Bitcoin has one up on gold, as Bitcoin can actually be used as a form of payment.
Gold can be used as an indicator for how Bitcoin performs during crisis due to their general similarities. All data shows that gold performs well during deflation, which includes a sharp rise in financial stress and increased risk of corporate defaults. Companies with a lot of debt struggles and many goes bankrupt. Gold is also doing well in inflations, but it is when deflations occur that the true strength of gold comes out. We are set for global recession and global deflation. It is therefore time to pay extra attention to the Bitcoin right now. If you have time and interested, watch it.