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Why More People are Buying Bitcoin

Cryptocurrency

Why More People are Buying Bitcoin

by | Cryptocurrency

Ben Constanty

CEO, Smartlink

Disrupting online payments with smart contracts.

Financial technology has given way to a new form of currency, and that is cryptocurrency.

A decentralized form of payment that allows people to transact peer-to-peer.

Odds are you have seen an increase in coverage of Bitcoin and may be wondering why. With global uncertainty and people looking to diversify, Bitcoin is beginning to fill the needs of many.

However, the question at large is why people are turning to this alternative form of currency?

🔎 Key takeaways

  • Bitcoin has greatly outperformed the US Dollar as well as popular stores of value this year
  • Bitcoin is fully decentralized meaning that no one can prevent it from being bought and sold
  • Bitcoin can be used as a hedge against inflation as it is getting scarce and its value increase

Hedge Against Inflation

First, people are looking at Bitcoin as a form of inflation protection. In the chart below, you can see the performance of the U.S. Dollar against Bitcoin year-to-date.

Performance of the US dollar against Bitcoin

The USD has been in question this year with a bearish trend. Compared against Bitcoin, it is no wonder people are attracted to the cryptocurrency.

With inflation, the currency begins to lose purchasing power and impacting your overall returns.

The goal is to ensure your wealth is in an asset that not only outpaces inflation but can be easily liquidated should the need arise, and Bitcoin fills those needs.

Decentralized Currency

Decentralized Bitcoin

Another reason people are purchasing Bitcoin is the idea of a decentralized currency.

The IMF has come out with talks of revolutionizing the currency world with a centralized digital currency.

If that is the case, it poses a real threat to the USD being the world’s reserve currency.

The benefit to Bitcoin is no matter the fiat currency, it can be bought and sold using nearly any currency out there.

That means should the IMF go through with a new global currency, then Bitcoin can hedge against volatility and be easily converted into the new currency.

Also, the idea of having a truly decentralized, peer-to-peer payment method is strong with Bitcoin users.

Leaving government and the middleman out not only saves time, but transactional costs as well.

Limited Supply

Bitcoin and inflation

Lastly, unlike the U.S. Dollar and unlimited printing by the Federal Reserve, Bitcoin has a finite balance.

That means at the end of the day there will only be a certain amount of Bitcoin in circulation.

That is why the cryptocurrency goes out so many decimal places, so users never have to worry about there never being enough Bitcoin.

This means there is no threat of inflation caused by an outside entity and the laws of supply and demand can reign true.

The Fed on the other hand can monitor and adjust the money supply with the flip of a switch. Should inflation rise, it lowers purchasing power and ultimately hurts the consumer.

The FED and Bitcoin adoption

At the end of the day, we may very well see a new currency take hold and the USD lose its spot as reserve currency. For many, protection from this resides in Bitcoin.

With the ability to store Bitcoin outside of the Internet, it gives you a level of protection and control other currencies cannot.

While it is still a volatile asset, people are taking it more seriously by the day. Now may be the perfect to look at this asset as a protection against the U.S. Dollar and a pathway to future transactions.

Ben Constanty

CEO, Smartlink

Disrupting online
payments with smart contracts.

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