Is Bitcoin Better than Gold? Part Three: Inflation


Most people consider both gold currency and Bitcoin to be deflationary currencies, given their fixed supplies. In the long run, this assumption mostly is true; once all the gold and Bitcoin has been mined, their supplies cannot be expanded to keep track with demand. As a result, prices will gradually fall as the fixed supplies of the two currencies become more valuable. However, during the short run, both currencies are capable of growing in supply far beyond their demand. Gold currency is not as prone to such supply surpluses, though, as gold can be funneled into industry when the supply exceeds its monetary demand. Bitcoin has no industrial use, so the market just has to wait out periods of inflation.

Also read: Is Bitcoin Better than Gold? Part Two: Trust

goldveins-bitcoinistgoldveins-bitcoinistGold miners increase the supply of gold in an economy by selling it to gold purchasers. Since gold can be used both for currency and in industry, there are two different avenues miners can choose when selling their products. Furthermore,

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