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adhoc32

That it is a hedge against inflation because of the network effect and vice versa.

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Isn’t everything other than cash a hedge against inflation?

Yes but not equally.

no, a car for example devaluates over time.

Driving a car devalues it, because you're using up the utility and extracting value from it.

If you buy a car and treat it like an investment (don't drive it, store it properly, keep it maintained) it behaves like an investment. Depending on the car and the market, the value goes up substantially.

Here's an example of a 2000 Honda Civic selling for $50,000 USD : https://bringatrailer.com/listing/2000-honda-civic-27/

Bitcoiners like to emphasize Bitcoin's limited supply, but Bitcoin is hardly the only thing in life with a limited supply. There will never be any more 2000 Honda Civics, for example.

Sure, but it costs money to store it and maintain it in a good shape. Also try sending the equivalent value of 100$ using a Honda Civic. Barter economy is impractical.

This seems like an example of survivorship bias. That Honda is an outlier. Not every car will go up that much if at all. Hondas are known for reliability but it takes time to know if a car model is reliable and not a lemon.

The purchase price of that car would have been $27,320.28 in today's dollars. Also, you still have to store it and do some minor maintenance even though it's not being used. The true cost of ownership for 21 years isn't really known. It's hard to know how much the real profit actually was. Either way, it's a gamble as an investment strategy.

Ok. Every investment. Bonds, real estate, stocks, metals. Magic cards probably don't count.

The point is that "use BTC as a hedge against inflation" is obviously not a thing since people are chasing 10x growth.

Maybe many under-informed retail investors are chasing 10x growth, sure, but it feels like the larger institutions mentioned here are doing it likely the same reason they invest in any other asset: diversification.

Funnily enough my brother showed me prices for magic cards he sold a few years back. They have surged in value in 2020. The asset price inflation isn’t limited to tech stocks.

Why would you hedge against something like inflation, which is relatively constant over a year, by putting your money into a highly speculative risk asset with absolutely insane volatility over that same timeframe? Like many arguments for Bitcoin, this one just doesn't make sense.

"Relatively constant over a year" seems very loose don't you think? In the past year we've seen an unprecedented injection of money into the system. Presuming you're living in the U.S. have a look south of the border to find out how every national currency is always a few economic policies from throwing inflation targets out of the window.

Even countries that do have hyperinflation experience it at a somewhat predictable pace. With Bitcoin, you don't know if it's down 80% tomorrow, then up 200% the next day, then down 50% the day after. It's a huge tail risk.

In the Weimar republic eggs went from $0.5 to $500 pretty quickly and by 8 months eggs were $1,500,000. Happens quicker than you think and that's a hell of a tail risk.

Bitcoin has been pretty consistently up on any timeline over the last decade. I've been present every crash and my tolerance for keeping a small percentage of net worth in it increases each time.

You don't have to keep 100% of your cash in bitcoin. With the current pace of money printing I think not keeping something in it is basically negligence to your family.

This happened because there wasn't enough eggs or food in general. If there is food shortage in the future people will pay all the bitcoins they have to get a loaf of bread or a few eggs.

Yes, inflation happens when there is more money than goods. What point are you making?

> Happens quicker than you think and that's a hell of a tail risk.

It's not a tail risk. If you see prices increase exponentially over the span of months, you will have had plenty of time to react. Inflation is mostly a problem of the wage earners who don't have cash savings in the first place. Otherwise, if you have significant life savings all in cash, you're financially illiterate and cryptocurrency is the last thing you should put your money into.

> Bitcoin has been pretty consistently up on any timeline over the last decade.

Bitcoin also has been consistently down 50% from the previous high most of the time. It has pump-and-dump penny stock levels of volatility.

Bitcoin is fine as a speculative asset, as an inflation hedge it's just completely asinine. There is virtually no correlation between actual inflation and the value of Bitcoin. There may be some correlation to the level of panic about hyperinflation among the uninformed public. If you want to ride that wave, go for it.

The inflation may be constant each year but over the years it accumulates. Check yourself the inflation impact on your savings:

https://www.rl360.com/row/tools/inflation-calculator.htm

With inflation rate 2% after 25 years you lose about 40% of your savings value.

I'm fully aware of that, but there's many financial instruments to hedge against inflation. To that end, I'd sooner put my money into Rolex watches or sneakers than cryptocurrency.

Friendly advice, buy 20$ of Bitcoin to feel how it works before judging it. It might change your mind.

I do know how it feels, because I do hold some Bitcoin for "fun". Most of the time, it's down 80% from the previous high. Then it randomly appreciates 10x before cratering again. With any meaningful amount of money, that doesn't feel good at all.

The purchasing power I might lose from a mere $20 is of course irrelevant. If I put it into Bitcoin it might turn into $100 or $200 at an off-chance, but that has nothing to do with inflation. Bitcoin just isn't that correlated with cash. If I wanted to make a $20 bet that the dollar inflates dramatically, I would buy an option to buy gold at $5000.

Because our government just printed a LOT of money. Look into what money supply does to inflation. More supply of money means things cost more. Interest rates go down, and it’s better to not have cash but assets. I just loaded up on gold, platinum, silver, art, crypto, and real estate. Those will all fare better than cash or savings as hyperinflation grips the country.

> Because our government just printed a LOT of money.

That may be true, but the broader money supply hasn't really changed much:

https://tradingeconomics.com/united-states/money-supply-m2

It's also not really clear how it would. Banks aren't out there giving out loans like candy to everyone for anything. The little bit of helicopter money doesn't even cancel out the lack of spending due to COVID layoffs. You just can't have CPI inflation that way.

> I just loaded up on gold, platinum, silver, art, crypto, and real estate.

One of these is not like the others.

> Those will all fare better than cash or savings as hyperinflation grips the country.

You've probably listened too much to gold/silver salesmen who have been warning about the next crash and hyperinflation for many decades.

In reality, inflation is arguably bullish for all these heavily indebted companies in the stock market. A market crash can be hedged against too, just look at how Universa Investments performed in 2020. How did gold perform though? Unimpressive.

> broader money supply hasn't really changed much

Did you zoom out? M2 money supply increased 25.6% in the past year. Might be easier to see at https://fred.stlouisfed.org/series/M2

A modest change, considering that M1 has almost doubled.

What? Is 25% change in total money a modest change?

In perspective, yes it is. In a normal year you might expect M2 increase by 5%. Last year was special, of course. People are acting as if hyperinflation was right around the corner because M1 just doubled, ignoring that M1 quadrupled in the ten years before 2020 and that it didn't cause hyperinflation then either.

So, we just print 5x normal amount (which is also a big why) and it is all good.

You can have a pandemic, or you can have liquidity crisis on top of a pandemic. Choose wisely.

Is that so? People have lived through pandemics when they were using gold as a medium of exchange. The pandemic is an excuse for printing money. I would prefer that debasing of fiat would not exist, i.e. there is only limited supply which can not be inflated arbitrarily.

FYI they do not print money. The US fed gives banks money in exchange for collateral (US govt debt). The banks cannot spend this money, it has to sit there doing nothing. The banks do make a small amount of money from the assets they swapped for the money. Eventually the swap is reversed, and if the bank does not return the money then the fed keeps the collateral.

The M2 has increased because interest rates are down (on purpose) and more money is being borrowed.

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