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> Bitcoin is inflating as an asset. I don't think this is precise. Inflation of an asset means that the asset itself drops in value, relative to the value of o

> Bitcoin is inflating as an asset. I don't think this is precise. Inflation of an asset means that the asset itself drops in value, relative to the value of other goods. For example: when prices rise, the USD itself would be inflating because would then take more USD to buy goods. Bitcoin is rising in price compared to the USD. So it's not "inflating." If we treat Bitcoin as a currency, it's deflating because right now it takes fewer Bitcoin to buy goods than one year ago. This is also why "asset inflation" is not precise. The asset itself is not inflating, it is actually deflating wrt. to other goods.

DenisM 6y ago
> This is also why "asset inflation" is not precise I'm afraid this ship has sailed.
mbesto 6y ago
> Inflation of an asset means that the asset itself drops in value, relative to the value of other goods. That assumes an asset can be used as a medium of exchange. In its current form, BTC is not a medium of exchange, it's a store of value. In other words - the word inflation has to do with purchasing power. If the asset isn't used as a way to purchase then comparing the characteristic of inflation is basically pointless. It' be like saying "trees are inflating as an asset". No one makes purchases using trees so the concept is irrelevant.
- tylerhou 6y ago
  Hence, "if we treat Bitcoin as a currency." But you're right that Bitcoin is mostly used as a speculative investment, and not to actually exchange goods. (That's not very convincing to crypto-people, though.)
dleslie 6y ago
I'm not certain that Bitcoin should be treated as a currency.
imtringued 6y ago
I have used asset inflation in the past to mean the opposite of CPI inflation. The appreciation of assets without a corresponding increase in CPI inflation. I also refer to Bitcoin as a deflationary currency. The problem is that I needed a simple easy to understand term that cryptocurrency, real estate and stocks so I just referred to the entire class of goods gaining value relative to USD as "asset inflation" because CPI inflation also refers to a class of goods and thus its easier to transfer the concept. I will admit that this is not precise enough.
- tylerhou 6y ago
  I think a better term would just be “rise in asset prices/values,” or “asset appreciation.” You can add “in real terms” to clarify after inflation. It more accurately conveys the fact that 1) the assets are increasing in value, compared to a basket of goods or the USD; and 2) doesn’t imply that the asset is a currency.

DenisM 6y ago

> This is also why "asset inflation" is not precise I'm afraid this ship has sailed.

mbesto 6y ago

> Inflation of an asset means that the asset itself drops in value, relative to the value of other goods. That assumes an asset can be used as a medium of exchange. In its current form, BTC is not a medium of exchange, it's a store of value. In other words - the word inflation has to do with purchasing power. If the asset isn't used as a way to purchase then comparing the characteristic of inflation is basically pointless. It' be like saying "trees are inflating as an asset". No one makes purchases using trees so the concept is irrelevant.

tylerhou 6y ago
Hence, "if we treat Bitcoin as a currency." But you're right that Bitcoin is mostly used as a speculative investment, and not to actually exchange goods. (That's not very convincing to crypto-people, though.)

dleslie 6y ago

I'm not certain that Bitcoin should be treated as a currency.

imtringued 6y ago

I have used asset inflation in the past to mean the opposite of CPI inflation. The appreciation of assets without a corresponding increase in CPI inflation. I also refer to Bitcoin as a deflationary currency. The problem is that I needed a simple easy to understand term that cryptocurrency, real estate and stocks so I just referred to the entire class of goods gaining value relative to USD as "asset inflation" because CPI inflation also refers to a class of goods and thus its easier to transfer the concept. I will admit that this is not precise enough.

tylerhou 6y ago
I think a better term would just be “rise in asset prices/values,” or “asset appreciation.” You can add “in real terms” to clarify after inflation. It more accurately conveys the fact that 1) the assets are increasing in value, compared to a basket of goods or the USD; and 2) doesn’t imply that the asset is a currency.