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Conservation of Purchasing Power is hailed to be one of the critical use cases of Bitcoin and other cryptocurrencies.
For clarity, purchasing power is the currency’s value, which is measured as the number of goods or services that one unit of money can buy. When there is inflation, what you can buy with one unit of money substantially goes down. In simple terms, purchasing power is the buying power of a currency. Inflation reduces the value of the currency’s purchasing power.
“If you are thinking the price of Bitcoin is going up, you must also realize that the purchasing power of Bitcoin is increasing, hence you are guaranteed of freedom. You must decide not to allow the fiat currency to be your mental intermediary when thinking about the world.
Bitcoin is often promoted as an inflation hedge. However, will it give the sure-fire protection against inflation?
“The government wants to fool its people by doubling the minimum wage but at the same time printing more than enough money into circulation. We can’t solve problems by creating more problem for generations to come which is why Bitcoin and some other decentralized finance applications powered by blockchain technology looks to be our only hope of creating a better future.” ―
Money has purchasing power. Purchasing power buys. Inflation decreases purchasing power. The best money is one that will have less inflation.
An economy is formed when groups of people leverage their unique skills, interests, and desires to trade with each other voluntarily. People trade because they believe that it makes them better off. Historically, a form of intermediation (money) is introduced to make trade easier.
There have been different types of money like Fiat Money, Commodity Money, Representative money, Fiduciary Money, Commercial Bank Money. There are capabilities and limitations to every kind of money. Not all money is usable everywhere.
The desired characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability.
Cryptocurrency is money that is available as data. Bitcoin is generically “data as a currency.” Blockchain technology facilitates certain services by providing a digital architecture. The Bitcoin economy or the cryptocurrency economy can thrive only if three ecosystem players are in place: 1. The Blockchain Infrastructure. 2. Transacting parties. 3. Accountants.
Cryptocurrency is defined as data money. The ownership of cryptocurrency provides users with an exclusive right to move data privately, whether in a private or public space.
All the transactions happening related to cryptocurrency are actually “transfer of data transfer rights,” which in layman terms is stated as “cryptocurrency transfer from one wallet to another.”
“Innovations are very cruel by nature. They destroy the old ones to create space for themselves.”- ―
How far the data transfer rights can back up the everyday economy, whether it is geo-politically ethical to have crypto, the impact of crypto on an individual nation’s sovereignty is yet to be determined.
There is not enough data to substantiate the success of Bitcoin (BTC) and other cryptocurrencies, given the different technical inclinations of different blockchains. Moreover, there are different kinds of data transfer rights now.
onvincing statements to promote Bitcoin as a data money: “Innovation is not always liked in its early stage until it becomes a public point of discussion and interest. Bitcoin was like the Internet of the early 20s, and today we all use it. Most aspects of our lives revolve around the internet, the same way blockchain technology and other decentralized apps (DApps) will become mainstream solutions to our world in the future.”
Fiat money is widely used money now. It does not have use value or intrinsic value. It has value because the government maintains value.
With Bitcoin (BTC), who is going to maintain the value? People! So, how are the people going to keep whatever value they are willing to assign it with? What is the desirable feature of BTC, which is as attractive to pull fiat users to BTC? Was intrinsic value derived from melt value? So, what is the melt value of Bitcoin? BTC has no melt value! We need to think.
“Similar to Fiat currency, Bitcoin (or most of the cryptocurrencies) is also not backed by any gold or silver hence does not have any intrinsic value. The value of any currency comes from the backing of the state and the trust that people have over the government.”
Bitcoin Investors are like a group of Candy Crush Saga players trying to go all praises about their favorite game!
