Why Bitcoin’s Buying Power Keeps Rising
You work. You get paid. You trade your pay for the work that other people do.
Here’s a question for you. Over time, does the money you get paid with buy more of the work other people do, or does it buy less?
If you hold your country’s money, you know the answer. Inflation reduces what your money can buy. This is because the money supply is growing faster than the amount of work that’s being done. So more money buys less work.
If you hold precious metals instead, the theory is that the purchasing power holds steady, because producing that metal requires work that’s steady over time.
But if you hold bitcoin that purchasing power just keeps going up. A lot. Why is this?
Imagine if everything about the current process of making money was flipped upside-down. Imagine a system that made it impossible to print more and more money out of thin air. What if, instead of it being easy to create money, the system required that more and more work had to be put in to creating it? What if no matter how much work was put in only a certain predetermined amount could be created in a given time period? What if that amount kept shrinking? Surely then, by reversing the original process, of easily creating any amount over any time, the money’s purchasing power would grow instead of shrink. This, my friends, is Bitcoin.
Bitcoin takes inflation and flips it on its head. When you accept bitcoin, you sign on to the opposite process of the one that causes money to lose purchasing power over time. Bitcoin’s buying power over time is therefore the flipside of inflation — flip the inflation coin over and on the opposite side is bitcoin. However, bitcoin is not a coin you toss. Bitcoin is a coin you choose.
Choose bitcoin and you’ll never suffer from inflation again. Instead, you’ll benefit from it’s opposite.
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Endnote:
A small note for the keen reader: there is a nuance in Bitcoin that doesn’t actually require that more and more work goes into bringing new coins into existence but in practice, because the value keeps going up, people are willing to put more and more work into creating the new coins.
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Want more? This entire series (plus a 26th bonus article) is available as a pdf or kindle ebook at https://swanbitcoin.com/whybitcoin.
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This is article 3 of “Why Bitcoin” — a series of articles I am writing that are all short, accessible to newcomers and still interesting to long time Bitcoiners.
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