What Makes Cryptocurrencies A Good Hedge Against Inflation

An inflation hedge is an asset or investment that maintains or increases its value over time while protecting against decreased purchasing power and its adverse effects. Inflation in fiat-based economies is imminent, hence, the need for buffers against the adverse effects of inflation. Store of value investments such as Gold, stocks, real estate, bonds, or precious metals has been considered tools and investments that have worked as hedges for a long time. Cryptocurrencies have currently been embraced by the U.S. Securities and Exchange Commission as investable assets. Store of value assets and good inflation hedges, known as hard assets, should be capable of holding purchasing power over time. Fundamental properties linked with hard assets are scarcity, accessibility, and durability. Crypto As a Store-Of-Value Utility and scarcity are critical prerequisites to value, both of which are inherent in cryptocurrencies. The utility is the purpose of these cryptocurrencies and the problem they seek to address or improve processes. Scarcity refers to the number of digital coins or tokens in circulation. Regarding utility, one can use bitcoin as a store of value, ether to implement a pre-programmed code through smart contracts, and litecoin for payment of goods and services. Use cases and increased adoption are growing, indicating an interest in replacing current systems. Fiat currencies decrease in value over time due to money creati...