Editor's Note: This article comes fromCrypto Valley Live (ID: cryptovalley)Editor's Note: This article comes from

Crypto Valley Live (ID: cryptovalley)

Crypto Valley Live (ID: cryptovalley)", Author: Nate Maddrey & Coin Metrics Team, translation: Li Hanbo, reprinted with authorization by Odaily." 

For most of Bitcoin's existence, institutions have stayed away from investing in it, often on the grounds that it is a risky, speculative asset. However, over the course of 2020, many institutions have begun to endorse Bitcoin. One of the most immediate reasons for this change is that Bitcoin can serve as a good hedge against inflation."For example, in early May, billionaire hedge fund manager Paul Tudor Jones announced that he had more than 1% of his assets in Bitcoin. He explained that he sees it as a hedge against inflation, saying:"We are witnessing the Great Monetary Inflation - an unprecedented expansion of every form of money, the likes of which the developed world has never seen.

Why Corporate Treasuries Might Consider Bitcoin

In the report, Fidelity Digital Assets cites potential inflation as one of the main reasons why companies are starting to consider holding Bitcoin in corporate treasury bonds. Companies such as MicroStrategy and Square have recently bought bitcoin, saying they see it as a protection against inflation.

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Source: FRED Economic Data

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Source: Federal Reserve Bank of New York, Microeconomic Data Center

Although the inflation rate is still around 2%, the uncertainty of future underlying inflation has increased. In other words, while the median estimate of expected inflation remains pegged at around 2%, the difference in expectations has widened. This is reflected in the chart below, where data from the New York Fed shows that after March 2020, inflation uncertainty increased above 3%."image description"。

This heightened uncertainty was also reflected in the Federal Reserve's latest monetary policy statement in August 2020. While the Fed has historically targeted 2% inflation, the updated statement said,

Bitcoin's current block reward is 6.25, which means that every time a block is mined, 6.25 new bitcoins will be issued. On average, a block is mined every ten minutes, which usually means about 800-1000 new bitcoins are issued every day. Since the exact frequency of new blocks being mined is unpredictable and varies slightly from day to day (Bitcoin's difficulty is adjusted every two weeks, keeping the average block time at around ten minutes), in the long run this supply issuance It is certain and predictable.

Bitcoin, by contrast, has not been affected by monetary policy uncertainty. One of Bitcoin's core attributes is its predictable supply schedule. Every time a new block is mined, new bitcoins are issued as a reward to the miners who successfully mine that block. This is the only way to create new bitcoins and is a key part of the bitcoin protocol.

Bitcoin's current block reward is 6.25, which means that every time a block is mined, 6.25 new bitcoins will be issued. On average, a block is mined every ten minutes, which usually means about 800-1000 new bitcoins are issued every day. Since the exact frequency of new blocks being mined is unpredictable and varies slightly from day to day (Bitcoin's difficulty is adjusted every two weeks, keeping the average block time at around ten minutes), in the long run this supply issuance It is certain and predictable.

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Source: Coin Metrics Network Data Charts

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Unlike currencies, there is a hard cap on the total amount of Bitcoin. Halving occurs every four years until a supply cap of 21 million bitcoins is reached. This means we can predict the future pretty well and have a clear idea of ​​what Bitcoin's inflation rate will look like in 1 year, 5 years, 10 years.

Bitcoin’s predictable and transparent financial policy ultimately makes it a good potential hedge against inflation. While the U.S. dollar and many other currencies face increased uncertainty about inflation expectations in the coming years, Bitcoin’s inflation expectations are predetermined. Due to its regular halving and maximum supply cap, Bitcoin's inflation rate will decrease in the future, while the non-currency's inflation rate may increase.