Bitcoin and fiat money represent two incompatible paradigms in money theory. We dare to compare.After discussing why Bitcoin is better than gold last week, we’re comparing fiat money this week. Ring free for round two.
When it comes to scarcity, Bitcoin has a home game. The cryptocurrency No. 1 is the hardest form of money in human history – and the trend is rising. Because the inflation rate halves every four years; one speaks of the so-called Halvings. Bitcoin’s monetary growth is set until 2140. During the first four years of Bitcoin’s existence, 50 BTC came into circulation per block, now it is just 6.25. Bitcoin’s money supply growth is becoming increasingly scarce and makes a diametrical difference to fiat money. After all, the monetary growth of the global central banks these days is unstoppable. Fueled by alarming economic data caused by the corona pandemic, central banks are flooding the financial markets with liquidity.
Bond purchase programs continued
Recently, the US monetary authorities announced that they would continue their bond purchase programs until the end of the year. Originally it was said that quantitative easing would only be carried out until the end of September. If that was still not enough, there would still be the possibility of further loosening the financial market with further liquidity injections. The Fed has already signaled its willingness to do so.