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Of all the antagonisms for young adults, I would say an easy method to buy cryptocurrency and hedge against inflation is not one of them. The much more signific

Of all the antagonisms for young adults, I would say an easy method to buy cryptocurrency and hedge against inflation is not one of them. The much more significant antagonist for financially vulnerable young adults is the Federal Reserve and its inflationary monetary policy that has priced many out of ever owning a home. Furthermore, the elite's industrial policy of offshoring manufacturing to China, deindustrializing the West, and high energy prices has done much more harm to the middle and working class than the volatility of crypto.

dragontamer 3y ago
> and hedge against inflation is not one of them BTC lost value through the great inflation and is only gaining value today now that inflation is down to 3%. Sounds like a pretty bad hedge against inflation. People need to stop repeating this lie. EDIT: If people need an inflation hedge, buy i-bonds first, and then TIPS after you max out. These are indexed against CPI, so the more inflation happens the more i-bonds/TIPS make.
- latchkey 3y ago
  You act like BTC is only available in the US.
  - kylebenzle 3y ago
    Anti-crypto people these days have to do a lot of mental gymnastics to avoid the truth that Bitcoin (now called Bitcoin Cash) has worked perfectly for over a decade with almost no downside if you just buy slowly over time and hold/spend. Bitcoin Cash works great and has for over ten years.
    - yladiz 3y ago
      Bitcoin Cash as a standalone thing has been around for a bit over six years, not over ten.
    - mikhael28 3y ago
      Bitcoin cash isn't real Bitcoin.
  - dragontamer 3y ago
    People saying "inflation hedge" are at a minimum, English speakers, and secondly, are likely Americans who were concerned about the 9%+ inflation of a year or two ago. Alternatively, maybe they're British but the great inflation affected both sides of the Atlantic. Then again, Coinbase is an American company providing American services, so I think its safe to say that this topic is American focused.
    - latchkey 3y ago
      Coinbase is an American company, but operates globally. From wikipedia: "Coinbase operates as a remote-first company and has no physical headquarters.[5] As part of its SEC filing to go public, the company reported 43 million verified users, 7,000 institutions, and 115,000 ecosystem partners in over 100 countries." As for inflation, let me refer you to this post (and thread), a favorite of mine. https://news.ycombinator.com/item?id=26238410 https://news.ycombinator.com/item?id=26238410
- tnel77 3y ago
  RemindMe! 5 years
  - dragontamer 3y ago
    Or you could just look at the last 15 years and stop pretending that BTC is anything new. If BTC were a person, it'd be entering high school and thinking about a student-driver license. We've got an extensive history to draw upon now.
    - Geisterde 3y ago
      A history of bitcoin capturing orders of magnitude more value over basically any 4 year period, yea, the records pretty good for an emerging money.
      - desert_rue 3y ago
        That doesn’t mean it will continue to rise in the future. It also isn’t tied to anything outside of these very expensive exchanges. I can’t use bitcoin to buy a candy bar or pay someone to fix my toilet. Nor is there intrinsic worth to it.
        Geisterde 3y ago
        Value is subjective, not intrinsic. It is guarenteed to rise like everything else of limited supply; the value of fiat currencies must necessarily decrease over time in their operation, because the base monetary unit can only be issued as credit which must be paid back at interest. Were the value of fiat currencies to increase in any meaningful sense, it will result in widespread defaults in the banking sector.
        dragontamer 3y ago
        > It is guarenteed to rise like everything else of limited supply They aren't making any more VHS copies of Toy Story, which IIRC was estimated to be ~21 Million copies of tape.
- robertlagrant 3y ago
  Young adults aren't trying to hedge inflation. They're trying to make a life in a world that recommended poor degree choices and lots of student debt, people increasing in their country faster than housing, a nation and state that taxes them to fund feelgood policies, and that tells them daily that billionaires are the reason they don't have enough money. That's rough.
  - deleted 3y ago
    [deleted]
- datadata 3y ago
  Inflation is a lagging indicator. Bitcoin gained in 2020 and early 2021 when debasement happened and the supply of money increased. That debasement takes time to show up in price data, and then even longer to show up in headline inflation, which is a 12 month average. TIPS and i-bonds are limited in their role as a hedge. Sure, you are exactly compensated for inflation on the capital you invest. However, without the ability to have any leverage, you can't actually use this as a hedge against other capital which has exposure to inflation but which couldn't be converted.
  - dragontamer 3y ago
    It sounds like you're trying to tie BTC to the monetary supply. BTC goes up when M2 increases, and possibly goes down when M2 goes down? So why is BTC going up when M2 is shrinking for the past 18+ months? https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS
    - datadata 3y ago
      Not sure, it is just a correlation not an iron rule and definitely not the only influence. The shrinking here of m2 is much much smaller than the previous increase was as well.
      - dragontamer 3y ago
        > it is just a correlation Correlation of what, to what, and what's the R-value? Across what time frame? https://en.wikipedia.org/wiki/Correlation https://en.wikipedia.org/wiki/Correlation These words normally have _meaning_ ya know. They're not just things you toss out in a meaningless online discussion.
        datadata 3y ago
        There are certainly time frames where change in global m2 money supply and change in bitcoin's price over say 12mo would have a positive R value. That isn't the point I am making. If the amount of money available goes up, then one would expect that the price of other things, all else held equal would also go up. It would be quite strange for bitcoin or any other commodity to behave differently consistently and over a long period.
- roenxi 3y ago
  CPI has typically not been keeping pace with the amount of money creation afoot [0]; attempting to index against the CPI seems like a way to end up with low quality investments. IMO if an asset isn't comparable to the M2 it is quite questionable; I'd expect inflation hedges to act more like gold, on average showing "real" returns. Seems likely the time horizon you're talking about is too short in this case. The last few years have been a bit weird by the metrics - it looks like something has changed in the financial plumbing. But the USD has a policy of being an unreliable measure of value and Bitcoin does not, so there is a pretty good chance that Bitcoin will hold its value over time. The price hasn't been trending down (yet?). Although I'd advise people not to choose their investments based on advertising. People don't really advertise good financial deals. They use the ad budget to get in on the deal. [0] https://research.stlouisfed.org/publications/economic-synopses/2023/05/25/the-rise-and-fall-of-m2 https://research.stlouisfed.org/publications/economic-synops...
  - dragontamer 3y ago
    > IMO if an asset isn't comparable to the M2 it is quite questionable; M2 has shrunk for the last 18 months. Anything correlated to M2 would have similarly shrunk for the last 18 months... which is basically nothing being discussed in this topic. ------------ "Inflation Hedge" is traditionally CPI, maybe PCE if you're being fancy. There's a few other inflation indicators but they're all within a magnitude (and well correlated) to CPI / PCE.
    - roenxi 3y ago
      Unless you expect people to cash out their life's savings every 12 months, I don't see why anyone should care if an asset's price is correlated to the last 18 months of the M2. It just needs to be something that tends to do better than the M2. If it isn't doing at least that well, sell out and buy something that is. And "Inflation hedge" has been redefined to be something that isn't very useful for investing. You'll notice I'm talking about prices going up due to money creation, not inflation. I choose my words carefully there, we don't have a pithy term for that effect as far as I know.
- mdgrech23 3y ago
  Last time I checked overall BTC has gone up in value over the last 5 years and by a large margin unless you bought at all time highs. The statement it lost value through inflation doesn't even make sense.
  - dragontamer 3y ago
    "Inflation Hedge" means you have an correlation with Inflation. Or in statistical terms, reason to believe that r-value is positive. (ie: if Inflation is +9%, then inflation-hedge is positive, or even close to +9%, though it could be +18% or whatever. If inflation is -5%, then an inflation-hedge should also be -5% or otherwise negative) Anyone claiming "inflation hedge" needs to tell me how they calculated this correlation.
fckgw 3y ago
Oh wow you should be a copywriter for Coinbase
- soup10 3y ago
  Unfortunately it's been like this since the beginning of crypto, everyone who buys in becomes a tireless advocate for their "investment".
  - mikhael28 3y ago
    Shilling. Endless shilling.
  - luma 3y ago
    It's a requirement. "Line don't go up" if there aren't new buyers out there to buy out your bags, so you're forced to try and hype thing or lose your whole investment.
matthewbauer 3y ago
How can the fed both cause inflation and high housing costs? Raising interest rates like they have been doing should lower inflation but make housing more expensive.
- rvba 3y ago
  First they give free money so house prices skyrocket. 10 years later they "fight" inflation that they caused by making credit scarce. House prices are sticky and dont drop by 50%. Also in general the inflation created through interest is not returned by central banks, so they make rich richer and poor poorer.
  - ianai 3y ago
    https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA
- robertlagrant 3y ago
  Raising inflation only lowers house prices if the number of people competing for the houses remains static.
avree 3y ago
Weird, I know friends who lost all their savings to cryptocurrency. Don't know anyone who lost all their savings due to inflationary monetary policy.
- roenxi 3y ago
  1) Are you sure? Inflationary monetary policy is literally "people who try to hold cash will lose all their savings over 50 years". You must know someone who tried that; it's an easy mistake to make and most people are really bad at understanding investment. 2) The Bitcoin price is currently comparable to its all-time highs. So someone who lost all their money on crypto was doing something more exotic than just buying and holding a diverse basket of cryptos.
  - mikhael28 3y ago
    There's an old expression - instead of try to save money on your taxes, find a way to make more money instead. I would give the same advice to people who freak out 'oh my god, inflation, it's going to eat all my money, even though I live in stable America and not Argentina' - chill out. Instead of freaking out and putting your money into unstable investments that have a high non-zero change of going to zero, find a way to make more money. Stories of people who put their money into risky investments that promised high interest, only to lose their shirt, are quite common in crypto at least - those people would have been much better served just keeping their cash.
  - avree 3y ago
    Most savings accounts pay 5%+ now, I agree that holding your cash under your mattress is not the play, but that's very different than gambling on risky options or even riskier cryptocurrencies. Your second point makes zero sense - BTC is 40% lower than it's all-time-high, I just looked it up. Other cryptos are much worse.
    - roenxi 3y ago
      60% of all time highs, when the all time highs were ~2 years ago and the market is rather volatile, is comparable to me. It is a lot healtheir than the 2018 peak, and that looks like small biscuits compared to today. Regardless, being down 40% is not losing all the money. It isn't even losing half the money.
sonicanatidae 3y ago
Student loans take a large portion of the top of issues affecting young adults.
e63f67dd-065b 3y ago
> The much more significant antagonist for financially vulnerable young adults is the Federal Reserve and its inflationary monetary policy that has priced many out of ever owning a home The Federal Reserve doesn't control housing policy; local politics (often NIMBY's) do. House prices are high because there are not enough houses in cities where NIMBY's control the city council. No amount of interest rate adjustments will lower house prices if there are not enough houses to begin with. The alternative to high interest rates from the Fed is high inflation, and inflation is even more harmful to the average citizen. There's a reason Powell keeps emphasizing stable price levels in every single speech he gives, because high inflation is something that must not be allowed to happen. Cryptocurrency is not an inflation hedge, it's way too volatile for that. Cryptocurrency is the most speculative of speculative investments, and one must buy in knowing that you're flipping a coin and praying that it lands on tails.
luma 3y ago
I think you're on to something! If you want to each the young folks how banks are going to screw them long into the future, you could instead encourage them to get into crypto today so they can get screwed immediately.
1vuio0pswjnm7 3y ago
"New advertisements by Coinbase, a cryptocurrency exchange, prey on the financial anxieties of Gen Z and other young adults." It appears that HN comments promoting/defending crypto employ the same tactic.

dragontamer 3y ago

> and hedge against inflation is not one of them BTC lost value through the great inflation and is only gaining value today now that inflation is down to 3%. Sounds like a pretty bad hedge against inflation. People need to stop repeating this lie. EDIT: If people need an inflation hedge, buy i-bonds first, and then TIPS after you max out. These are indexed against CPI, so the more inflation happens the more i-bonds/TIPS make.

latchkey 3y ago
You act like BTC is only available in the US.
- kylebenzle 3y ago
  Anti-crypto people these days have to do a lot of mental gymnastics to avoid the truth that Bitcoin (now called Bitcoin Cash) has worked perfectly for over a decade with almost no downside if you just buy slowly over time and hold/spend. Bitcoin Cash works great and has for over ten years.
  - yladiz 3y ago
    Bitcoin Cash as a standalone thing has been around for a bit over six years, not over ten.
  - mikhael28 3y ago
    Bitcoin cash isn't real Bitcoin.
- dragontamer 3y ago
  People saying "inflation hedge" are at a minimum, English speakers, and secondly, are likely Americans who were concerned about the 9%+ inflation of a year or two ago. Alternatively, maybe they're British but the great inflation affected both sides of the Atlantic. Then again, Coinbase is an American company providing American services, so I think its safe to say that this topic is American focused.
  - latchkey 3y ago
    Coinbase is an American company, but operates globally. From wikipedia: "Coinbase operates as a remote-first company and has no physical headquarters.[5] As part of its SEC filing to go public, the company reported 43 million verified users, 7,000 institutions, and 115,000 ecosystem partners in over 100 countries." As for inflation, let me refer you to this post (and thread), a favorite of mine. https://news.ycombinator.com/item?id=26238410 https://news.ycombinator.com/item?id=26238410
tnel77 3y ago
RemindMe! 5 years
- dragontamer 3y ago
  Or you could just look at the last 15 years and stop pretending that BTC is anything new. If BTC were a person, it'd be entering high school and thinking about a student-driver license. We've got an extensive history to draw upon now.
  - Geisterde 3y ago
    A history of bitcoin capturing orders of magnitude more value over basically any 4 year period, yea, the records pretty good for an emerging money.
    - desert_rue 3y ago
      That doesn’t mean it will continue to rise in the future. It also isn’t tied to anything outside of these very expensive exchanges. I can’t use bitcoin to buy a candy bar or pay someone to fix my toilet. Nor is there intrinsic worth to it.
      - Geisterde 3y ago
        Value is subjective, not intrinsic. It is guarenteed to rise like everything else of limited supply; the value of fiat currencies must necessarily decrease over time in their operation, because the base monetary unit can only be issued as credit which must be paid back at interest. Were the value of fiat currencies to increase in any meaningful sense, it will result in widespread defaults in the banking sector.
        dragontamer 3y ago
        > It is guarenteed to rise like everything else of limited supply They aren't making any more VHS copies of Toy Story, which IIRC was estimated to be ~21 Million copies of tape.
robertlagrant 3y ago
Young adults aren't trying to hedge inflation. They're trying to make a life in a world that recommended poor degree choices and lots of student debt, people increasing in their country faster than housing, a nation and state that taxes them to fund feelgood policies, and that tells them daily that billionaires are the reason they don't have enough money. That's rough.
- deleted 3y ago
  [deleted]
datadata 3y ago
Inflation is a lagging indicator. Bitcoin gained in 2020 and early 2021 when debasement happened and the supply of money increased. That debasement takes time to show up in price data, and then even longer to show up in headline inflation, which is a 12 month average. TIPS and i-bonds are limited in their role as a hedge. Sure, you are exactly compensated for inflation on the capital you invest. However, without the ability to have any leverage, you can't actually use this as a hedge against other capital which has exposure to inflation but which couldn't be converted.
- dragontamer 3y ago
  It sounds like you're trying to tie BTC to the monetary supply. BTC goes up when M2 increases, and possibly goes down when M2 goes down? So why is BTC going up when M2 is shrinking for the past 18+ months? https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS
  - datadata 3y ago
    Not sure, it is just a correlation not an iron rule and definitely not the only influence. The shrinking here of m2 is much much smaller than the previous increase was as well.
    - dragontamer 3y ago
      > it is just a correlation Correlation of what, to what, and what's the R-value? Across what time frame? https://en.wikipedia.org/wiki/Correlation https://en.wikipedia.org/wiki/Correlation These words normally have _meaning_ ya know. They're not just things you toss out in a meaningless online discussion.
      - datadata 3y ago
        There are certainly time frames where change in global m2 money supply and change in bitcoin's price over say 12mo would have a positive R value. That isn't the point I am making. If the amount of money available goes up, then one would expect that the price of other things, all else held equal would also go up. It would be quite strange for bitcoin or any other commodity to behave differently consistently and over a long period.
roenxi 3y ago
CPI has typically not been keeping pace with the amount of money creation afoot [0]; attempting to index against the CPI seems like a way to end up with low quality investments. IMO if an asset isn't comparable to the M2 it is quite questionable; I'd expect inflation hedges to act more like gold, on average showing "real" returns. Seems likely the time horizon you're talking about is too short in this case. The last few years have been a bit weird by the metrics - it looks like something has changed in the financial plumbing. But the USD has a policy of being an unreliable measure of value and Bitcoin does not, so there is a pretty good chance that Bitcoin will hold its value over time. The price hasn't been trending down (yet?). Although I'd advise people not to choose their investments based on advertising. People don't really advertise good financial deals. They use the ad budget to get in on the deal. [0] https://research.stlouisfed.org/publications/economic-synopses/2023/05/25/the-rise-and-fall-of-m2 https://research.stlouisfed.org/publications/economic-synops...
- dragontamer 3y ago
  > IMO if an asset isn't comparable to the M2 it is quite questionable; M2 has shrunk for the last 18 months. Anything correlated to M2 would have similarly shrunk for the last 18 months... which is basically nothing being discussed in this topic. ------------ "Inflation Hedge" is traditionally CPI, maybe PCE if you're being fancy. There's a few other inflation indicators but they're all within a magnitude (and well correlated) to CPI / PCE.
  - roenxi 3y ago
    Unless you expect people to cash out their life's savings every 12 months, I don't see why anyone should care if an asset's price is correlated to the last 18 months of the M2. It just needs to be something that tends to do better than the M2. If it isn't doing at least that well, sell out and buy something that is. And "Inflation hedge" has been redefined to be something that isn't very useful for investing. You'll notice I'm talking about prices going up due to money creation, not inflation. I choose my words carefully there, we don't have a pithy term for that effect as far as I know.
mdgrech23 3y ago
Last time I checked overall BTC has gone up in value over the last 5 years and by a large margin unless you bought at all time highs. The statement it lost value through inflation doesn't even make sense.
- dragontamer 3y ago
  "Inflation Hedge" means you have an correlation with Inflation. Or in statistical terms, reason to believe that r-value is positive. (ie: if Inflation is +9%, then inflation-hedge is positive, or even close to +9%, though it could be +18% or whatever. If inflation is -5%, then an inflation-hedge should also be -5% or otherwise negative) Anyone claiming "inflation hedge" needs to tell me how they calculated this correlation.

fckgw 3y ago

Oh wow you should be a copywriter for Coinbase

soup10 3y ago
Unfortunately it's been like this since the beginning of crypto, everyone who buys in becomes a tireless advocate for their "investment".
- mikhael28 3y ago
  Shilling. Endless shilling.
- luma 3y ago
  It's a requirement. "Line don't go up" if there aren't new buyers out there to buy out your bags, so you're forced to try and hype thing or lose your whole investment.

matthewbauer 3y ago

How can the fed both cause inflation and high housing costs? Raising interest rates like they have been doing should lower inflation but make housing more expensive.

rvba 3y ago
First they give free money so house prices skyrocket. 10 years later they "fight" inflation that they caused by making credit scarce. House prices are sticky and dont drop by 50%. Also in general the inflation created through interest is not returned by central banks, so they make rich richer and poor poorer.
- ianai 3y ago
  https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA
robertlagrant 3y ago
Raising inflation only lowers house prices if the number of people competing for the houses remains static.

avree 3y ago

Weird, I know friends who lost all their savings to cryptocurrency. Don't know anyone who lost all their savings due to inflationary monetary policy.

roenxi 3y ago
1) Are you sure? Inflationary monetary policy is literally "people who try to hold cash will lose all their savings over 50 years". You must know someone who tried that; it's an easy mistake to make and most people are really bad at understanding investment. 2) The Bitcoin price is currently comparable to its all-time highs. So someone who lost all their money on crypto was doing something more exotic than just buying and holding a diverse basket of cryptos.
- mikhael28 3y ago
  There's an old expression - instead of try to save money on your taxes, find a way to make more money instead. I would give the same advice to people who freak out 'oh my god, inflation, it's going to eat all my money, even though I live in stable America and not Argentina' - chill out. Instead of freaking out and putting your money into unstable investments that have a high non-zero change of going to zero, find a way to make more money. Stories of people who put their money into risky investments that promised high interest, only to lose their shirt, are quite common in crypto at least - those people would have been much better served just keeping their cash.
- avree 3y ago
  Most savings accounts pay 5%+ now, I agree that holding your cash under your mattress is not the play, but that's very different than gambling on risky options or even riskier cryptocurrencies. Your second point makes zero sense - BTC is 40% lower than it's all-time-high, I just looked it up. Other cryptos are much worse.
  - roenxi 3y ago
    60% of all time highs, when the all time highs were ~2 years ago and the market is rather volatile, is comparable to me. It is a lot healtheir than the 2018 peak, and that looks like small biscuits compared to today. Regardless, being down 40% is not losing all the money. It isn't even losing half the money.

sonicanatidae 3y ago

Student loans take a large portion of the top of issues affecting young adults.

e63f67dd-065b 3y ago

> The much more significant antagonist for financially vulnerable young adults is the Federal Reserve and its inflationary monetary policy that has priced many out of ever owning a home The Federal Reserve doesn't control housing policy; local politics (often NIMBY's) do. House prices are high because there are not enough houses in cities where NIMBY's control the city council. No amount of interest rate adjustments will lower house prices if there are not enough houses to begin with. The alternative to high interest rates from the Fed is high inflation, and inflation is even more harmful to the average citizen. There's a reason Powell keeps emphasizing stable price levels in every single speech he gives, because high inflation is something that must not be allowed to happen. Cryptocurrency is not an inflation hedge, it's way too volatile for that. Cryptocurrency is the most speculative of speculative investments, and one must buy in knowing that you're flipping a coin and praying that it lands on tails.

luma 3y ago

I think you're on to something! If you want to each the young folks how banks are going to screw them long into the future, you could instead encourage them to get into crypto today so they can get screwed immediately.

1vuio0pswjnm7 3y ago

"New advertisements by Coinbase, a cryptocurrency exchange, prey on the financial anxieties of Gen Z and other young adults." It appears that HN comments promoting/defending crypto employ the same tactic.