/biz/ - Business & Finance

Since a lot of people ITT seem to not understand the actual purpose behind cryptocurrency I've decided to write a couple of posts going into detail as to what the actual purpose and reasoning behind investing into cryptocurrency is.

The most important aspect is scarcity. Economics can be viewed as the study of scarcity and its effect on human behavior. Gold, Silver, Real Estate and paintings aren't special. They are relatively scarce which means their ratio to other abundant goods and services makes them relatively valuable.

Now comes the kicker: Real Estate loses utility for every new piece of Real Estate built. Which essentially makes it less valuable. Gold and Silver have an increasing circulating supply which inflates them by 2% and 3% a year respectively. Paintings aren't fungible and their individual pricing are more subjective as there isn't a market for paintings in general. Every single piece of art has a separate market in a sense making investment more risky.

Cryptocurrencies like Bitcoin however currently have an inflation rate of 1.1%. This is the scarcest an asset has EVER been in human history. People invest into Bitcoin because it's the scarcest asset known to man. Meaning that Precious Metals/Real Estate/Art will all inflate at a faster rate than Bitcoin.

Bitcoin was originally created to be a currency. But deflationary pressure and high fees prohibit it from being used. Contrary to what a lot of people think here that is actually a good thing for Bitcoin's valuation.

The formula to calculate inflation is M x V = P x Q.
M = Money supply (How much money is in existence)
V = Velocity (How much the money is transacted)
P = Price (How much of M you have to spend to buy a good or service)
Q = Production quantity (How much economic activity gets increased)

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>>22057206
Oh it's you again, the anon who only buys certain products rather than looking at the overall prices of products.
Inflation exists but it isn't as bad as it could have been because of the drop in the velocity of money

G. O. L. D. $&$ O.I.L boys til here to the beeeeeyoooooooond.

>>22028382
It is mostly yes.
Bit also keeping zombie companies afloat

>>22015841