Bitcoin – A hedge against inflation or failure of financial institutions?

Bitcoin protects you from inherent risks in the traditional financial system. Not only provides you an inflation hedge but also complete financial freedom.

By · Jul 15, 2020 . 4min read

Photo by Bermix Studio on Unsplash

You would have to go a long way back to think of more uncertain times than the one we are in now. The 2008 financial crisis was bad. Most measures, however, are showing that the economic fallout caused by COVID-19 is worse.

In such uncertain financial times, people seek financial security. This is where Bitcoin comes in. The Tudor Investment Corp. is a billion-dollar hedge fund. It announced earlier this year that it would be purchasing Bitcoin to hedge against ‘The Great Monetary Inflation’. Since February of this year, Central Banks around the world have printed $3.9 billion in currency. Since the supply of Bitcoin is not centralized, it acts as a obvious hedge against this due to it’s self custodian and capped nature.

More so, Bitcoin empowers the individual. If you are the self-custodian of your Bitcoin, you have complete freedom over how to use it. On the other hand, if your Bitcoin is stored in derivatives or on exchanges, then it is still a part of the traditional financial system. This is inherently risky during uncertain times. Banks would still have the power to freeze your assets. Governments can even go as far as seizing your digital assets.

Cash and gold are what people prefer to hold during uncertain times. It is even better to hold Bitcoin. Its value can increase and since it is digital, easy to use and authenticate.

Another aspect in which Bitcoin can prove to be a game-changer is in retirement savings. A global financial crisis can wipe out your entire retirement savings. This will not happen if your investments are in Bitcoin. Moreover, Bitcoin is exempt from capital gains. You can have tax free retirement savings.

What are you waiting for? It is time for you to adopt digital currencies. However take an informed decision before investing. Financial assets are subject to market risks.

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