Is Bitcoin a Hedge Against Inflation in 2024?
Every economist will tell you that your money will be worth less over time, and they are right. That is because of inflation. A small level of inflation is necessary for economic growth, but it makes the money you have saved in the bank worth less in the future. This is why some people advise others to find a reasonable business to invest in or go into real estate to preserve their wealth.
Unfortunately, not everyone can afford large investments or have the entrepreneurial skill and drive to own a business and compete in a free market. Some people just want to save the money they have earned from their jobs and focus on other things. However, saving money in the bank, while safe, lets their money drop in value, reducing its purchasing power.
There are a few places where people can place their money to hedge it against inflation, but not all of them will make their money easily accessible whenever they need it. Of the few that will, Bitcoin stands out as the most popular investment option.
What is Bitcoin?
Bitcoin is a cryptocurrency (digital currency) that can be both, sold, and traded on online exchanges. It is the most popular and widely used cryptocurrency ever made. The price of Bitcoin has always fluctuated but as of June 2024, it is trading near its all-time high price. Despite bitcoin’s volatility, its price tends to trend upwards in the long run. As a result, many retail investors consider it to be a hedge against inflation.
In addition to being a hedge against inflation, the long-term rise of Bitcoin’s price means investors will make more money over time. However, it is worth noting that bitcoin is a risky asset that is prone to frequent price fluctuations. Before buying Bitcoin, it will be best to research it and see if it suits your risk appetite.
Trading Bitcoin
You can buy Bitcoin from a reputable exchange like Kraken or other holders of the cryptocurrency via peer-to-peer transactions. Bitcoin exchanges have wallets where you can save your Bitcoin, receive it from others, or send it to whoever you want. For bitcoin to serve as a hedge against inflation, you should hold it for a considerable amount of time.
Ensure that you follow cryptocurrency news to know the latest developments in the world of Bitcoin. This will protect you from losing all your money overnight if anything unexpected happens because you will be able to act quickly.
Protecting Your Bitcoin
You should protect your Bitcoin the same way you protect your money in a bank. Keep your wallet address private and only share it with trusted parties intending to send Bitcoin to it. Do not reveal the login details of your crypto exchange account to anyone for any reason.
Endnote
Bitcoin is a hedge against inflation if you buy and hold it for a significant period. Its price rises and falls but overall, it tends to go up in value. However, you should adequately research before buying bitcoin to hold it long-term. It is a risky asset that is also valuable and can make you a lot of money.
This article has been published again in accordance with Socialnomics’ disclosure policy.
