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> 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%.

> 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.

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.