Bite #2: Inflation - Why Bitcoin Could Be Your Shield

👋 Hello, Bitcoin Enthusiast!

Today’s topic is all about inflation! Let’s break it down in simple terms so you can understand why it’s important and how it relates to Bitcoin.

🔍 What is inflation? 

Inflation is the rise in prices of goods and services over time, which means that the same amount of money buys less than it used to. Think of it like the slow leak in a balloon—it gradually reduces the value of your money.

💡 Why does it matter? 

Inflation matters because it eats away at your purchasing power. When inflation is high, your money doesn’t go as far, meaning you need more dollars to buy the same things. For Bitcoin enthusiasts, inflation is especially interesting because Bitcoin was designed to be inflation-resistant. Unlike traditional currencies, which governments can print more of, Bitcoin has a fixed supply of 21 million coins. This scarcity is one of Bitcoin’s most attractive features as a store of value.

⚙️ How does it work? 

Inflation typically happens when the supply of money in an economy grows faster than the supply of goods and services. Central banks, like the Federal Reserve in the U.S., often print more money to stimulate the economy. However, this can lead to too much money chasing too few goods, driving up prices. Bitcoin, by contrast, has a controlled and predictable issuance rate, thanks to its underlying code, which makes it immune to this kind of inflationary pressure.