- Bitcoin inflation rate to match gold this year.
- The Bitcoin halving slashed the inflation rate to 1.8%.
Bitcoin’s portrayal as the “digital gold” has furthered following the Bitcoin halving event. The Bitcoin halving event reduced Bitcoin’s new block emission from 12.5 Bitcoin to just 6.25 Bitcoin. This emission reduction ensures that there will never be more than 21 million Bitcoins in existence. This emission reduction resulted in Bitcoin’s inflation rate dwindling down from 3.6% to 1.8% per annum.
Amid COVID-19, both Bitcoin and gold have seen a surge in interest as their value proposition as a hedge against hyperinflation grows. This is due to both gold and Bitcoin having a limited amount of total assets. In other words, no one can create new gold or Bitcoin, unlike centralized fiat currencies. Thus, with the Bitcoin inflation rate comparable to gold, Bitcoin’s sentiment as the “digital gold” continues to grow.
How Cryptocurrency Inflation Compares to Fiat
In a report by The Crypto Associate, cryptocurrency inflation rivals that of global fiat currencies. The largest cryptocurrency by market cap, Bitcoin, now has an inflation rate of 1.8% per annum. Comparably, Ethereum will have an inflation rate of 1.9% per annum following Ethereum 2.0’s complete migration to proof-of-stake.
More importantly, the global inflation rate is well over 3%, with rates expected to increase due to COVID-19’s economic impact. As a result, digital assets’ value proposition as a hedge against hyperinflation may hold some truth, especially in developing countries experiencingexponential inflation.
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