Bitcoin – a tool in the battle against inflation
The institutional investors have started to see Bitcoin as the ‘digital gold’ that offers a hedge against inflation or rising prices. There have been signs that the shift away from gold into bitcoin that was seen in the fourth quarter of 2020 and start of 2021 is re-emerging in the past few weeks.
One theoretical way of preventing continuously rising prices is using currencies that retain value like gold. This way, with the same currency you will be able to buy the same goods in the same quantity, today and ten years later. However, this system is imperfect as it suppressed economic growth, trade in goods, and other ill-effects. Because of this, the job of retaining value is done by investments and assets.
Like gold, Bitcoin is available in a limited supply. In the past few years, the price of Bitcoins has risen faster than any other financial instrument. The rise is fast enough for retaining money’s value. This is why investors are looking at Bitcoin as their new preferred investment. For people who have held Bitcoin for a long time, it has made them huge profits. Its inbuilt protocols have enforced changes like ‘the halving’, which will push the value higher.
Many cash rich companies and institutional investors have been buying bitcoin and showing them as a part of their assets held on balance sheets. With Bitcoin assets’ increased value, their balance sheet is padded by a billion dollars. This is a global, precise, stable, highly divisible, and decentralized digital currency.