Comparing Bitcoin vs United States, China, India, Germany, Russia and Venezuela’s Inflation Rates
Inflation is the way that goods and services increase in price over time, which basically means that consumers have to pay more for different things. It impacts everything from the cost of living to the price of a gallon of milk. It also makes the value of the dollar drop, along with every other fiat currency. Considering that Bitcoin is now another way to hold value, understanding the correlation (if any) between digital currency and fiat currency.
The cause of inflation is the increase in money supply that happens at too rapid of a pace, causing the value to be reduced. Most economists believe that increasing the money supply causes the price increases of goods and services in the long run. However, the short-term effect of these changes has been hotly debated by economists.
With those factors in mind, CryptoVibes recently examined data from both Coinmetrics.io and tradingeconomies.com, comparing the inflation of Bitcoin to that of fiat currency. In the United States, the data showed that there is been 3.27% inflation from 1914 to now, on average. However, the height of inflation was in June 1920 at 23.7%, while a low of 15.8% occurred in June 1921.
In China, the average rate of inflation from 1986 to now is 5.18%. The highest point of inflation was in February 1929 at 28.4%, while the all-time low was in April 1999 at -2.2%.
The average inflation rate found in India was 6.27% from 2012 to now, though the November 2013 market the height of inflation at 12.17%. The record low was in June 2017 at 1.54%.
Germany’s average inflation from 1950 to now is 2.38%. In October 1951, inflation reached its highest high at 11.54%, which is fairly drastic from a record low of -7.62% in June 1950.
Of the entire list, Russia has had the second-highest average inflation through 1991 to today. Only accounting for the time from 1991 until now, the average inflation has been 122.02%. However, the highest inflation was seen in December 1992 at 2,333.3%, with the lowest inflation at 2.2% in January last year.
Both in the fiat and cryptocurrency markets, Venezuela’s inflation has been one of the most publicized inflation rates, which is what led them to cryptocurrency in the first place. Calculated from data spanning for 1973 to now, the average inflation has been 13,960.36%. The highest inflation seen happened just two months ago in January, reaching 2,688,670%. The lowest inflation has been in February 1973, when it reached 3.22%.
Bitcoin has only been in the market for the last ten years, which still surpasses the data collected by CryptoVibes on India, but its inflation has been only 0.01% on average. The highest inflation happened in January 2014, when it reached 0.038%, while it saw a low of 0.009% in both December 1992 and December 2018.
Bitcoin’s inflation over time has shown to be significantly lower than any of these countries, at:
- 150 times less than China
- 160 times less than the United States and Germany
- 200 times less than India
- 520 times less than Russia
- 268,867,000 times less than Venezuela
Based on this data, it looks like Bitcoin could offer a solution that will help consumers stay relatively clear of the inflation rate that most people have to deal with daily. Most cryptocurrencies have a fixed amount of coins, which means that there is no way to issue more coins than what the company originally decided. A perfect example is Bitcoin itself, which fixed its supply at 21 million. The “printing” of Bitcoins will never happen, which makes trusting Bitcoin even more effective.