The well-known economist and gold proponent Peter Schiff took it to Twitter to explain why high inflation rates won’t cause an increase in Bitcoin’s price.
Bitcoin Is Not An Inflation Hedge: Peter Schiff
World-renowned economist and author, Peter Schiff, took yet another chance to bash Bitcoin – something he’s been doing openly for quite some time now.
In his latest Twitter post on the matter, the expert argues that increasing inflation rates won’t bring Bitcoin’s price up.
Inflation results in higher prices for goods. Since #gold is a good, its price rises along with the price of other goods, preserving its relative purchasing power. Since #Bitcoin is not a good, its price does not relate to the price of other goods. So it’s not an inflation hedge.
Bitcoin is deflationary. Its inflation rate decreases over time as the supply is capped to $21 million. Unless the system is forked and altered, no further bitcoins will be produced. Hence, its buying power is, provided BTC is regarded as a currency, going to increase.
The Store of Value Narrative
There’s some truth to Schiff’s words. Higher inflation rates are unlikely to correlate directly with Bitcoin’s price.
However, the asset has been regarded by many as a store of value or “digital gold.” Even the Chairman of the US Federal Reserve called it a “speculative store of value, just like gold.”
As such, a lot of experts agree that it can serve as a hedge against the global financial markets. Some prominent and well-known investors such as Paul Tudor Jones have already come forward and stated that they’d allocated a certain part of their portfolio to Bitcoin. Moreover, Jones noted that he’s buying bitcoin to fight inflation.
While fiat currencies such as the US Dollar are inflationary, Bitcoin is not. It’s questionable what Peter Schiff meant by “inflation hedge,” but if it’s something that battles increasing inflation, he’s obviously wrong, because that’s what Bitcoin does.
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