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In cryptocurrencies, Bitcoin is the pioneer and best cryptocurrency to prevent inflation. Tokens can be used not only as a store of value but also as payment. 2024 was a strong year, breaking the previous record set in 2021 and setting a new all-time high (ATH). Most people are optimistic about Bitcoin and believe that the price increase will continue for some time. The upcoming Bitcoin halving and the legalization of spot ETFs are the main drivers for 2024. The project has attracted several new investors thanks to the ETF, and the halving is expected to reduce daily token sales. Digital Chamber of Commerce CEO backs Bitcoin as a hedge against inflationHowever, there are some concerns.
Bitcoin is a good option for resisting inflation as it can regain lost value. The supply of Bitcoin is limited to 21 million coins, meaning that the demand for the coin increases but the supply does not. In the long run, the price of Bitcoin will rise significantly, compensating for inflation in the economy. Moreover, the price of digital gold has increased by 150% in the past year.
The fact that Bitcoin has a finite amount and an inherent disinflationary mechanism known as halving supports the deflationary status of cryptocurrencies. A halving event will reduce miner payouts, ultimately lowering inflation and impacting the scarcity of Bitcoin. Mining Bitcoin becomes more difficult and expensive as mining returns decline over time.
The supply limit for coins is 21 million, so once all coins are mined, no more coins will be produced or sold. Inflation will end when BTC reaches the hard cap, but the hard cap is expected to be around 2140 as no more coins will be issued. Finally, due to its inherent disinflationary mechanism and growing external demand, Bitcoin has the potential for further price increases as its acceptance and demand increases. Bitcoin acts as a hedge against inflation due to its inherent mechanism of gradually reducing the rate of inflation.
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