How Bitcoin Cash Hedges Against Inflation

Many people in recent years have defined Bitcoin Cash a get-rich-quick scheme, that is, a scheme to get rich quickly: a Ponzi scheme.

Other people define Bitcoin Cash as a don't get poor scheme, a clear reference to the loss of purchasing power typical of fiat money, but let's explain everything from the basics.

Let's start with a quick summary of history: one of the most basic human needs was saving. Saving has ancient origins: imagine being a fisherman from the ancient times who survived on one fish a day. You will try to catch as many fish as possible without eating them, with the aim of having a supply that is always ready in case of illness or a decrease in fish in the stream.

Saving was not very easy, especially in large quantities, because fishes are perishable commodities.

Once you switched to metal coins, it became easier to save as you didn't need to work hard to maintain animal or vegetable products, it was enough to keep your coins safe, making sure that they were authentic beforehand, i.e. the quantity of precious metal respected certain parameters.

Slowly we arrived at the current monetary system, in which the power to mint money is a power reserved exclusively for Central Banks which, through national States, ensure that no one prints except them.

Over the millennia, man has changed many instruments, however one problem has always been present, an invisible enemy: inflation, the loss of value of the instrument used. The causes in the course of history were many, some natural and others artificial: from the Emperor who ordered the production of new coins, to the empire that by conquering new territories brought gold and silver inside, inflating citizens' savings.

This phenomenon didn't concern only precious metals, many African peoples for example used rare shells as commodity-money, until they came into contact with a community from a region where that type of shell was extremely common, bringing the first community into slavery.

Let's turn to modern history. With the evolution of nation States in today's form, they have begun to require more and more resources in order to support a public expenditure never seen before: hospitals, public works, armies and millions of individuals in the welfare state.

A State that sees its money-issuing power limited by the link with a commodity such as gold or silver cannot function as it is not sustainable through taxation; hence the State begins to remove the link between currency and reserves, thus adding an invisible tax: programmed inflation within the Monetary Policy. Not to mention the fact that in this way States have virtually no limit to the amount of new units of money they can create and spend. Phenomenon which, in the event of abuse, often leads to situations of hyperinflation.

The monetary system described above is called fiat money.

As you understood from this introduction, money has evolved over the millennia, a technological evolution: man has always tried to solve the defects of the monetary system of his time trying to create something more efficient. One of the biggest problems has always been inflation.

One of the Flaws of Fiat Money: Inflation

We have therefore come to the focal point of this article.

According to the monetary view advocated by Bitcoin Cashers, one of the most frequent reasons that have caused and are causing inflation around the world is the expansion of the money supply.

The concept is very simple and elementary: the more money there is in the market, the less it has value; scarcity matters. With no reserves or limits on money creation, fiat currencies are extremely vulnerable to this problem.

Here is the graph representing the M2 money supply of the US dollar year by year.

With M2, economists calculate the sum of cash, current accounts and bank and post office deposits.

Bitcoin Cash, on the other hand, is characterized by its limited and finite quantity: 21 million. Not only that, Bitcoin Cash is the only asset in the history of humanity that we can know exactly the rate at which it will be issued over time.

When it comes to fiat money, a serious mistake is usually made by considering only Euros and Dollars, two of the "strongest" currencies. Outside our everyday life, however, there are about 180 other "recognized" currencies, of which 130 are independent, that is, not others linked to other currencies, unlike, for example, the Hong Kong dollar, which has its value linked to the US dollar since 1983. The other 130 currencies are independent and their value fluctuates freely, with devastating effects on citizens' savings.

We are talking about Lebanon, Turkey, Argentina, Venezuela, many African countries and many many others.

When we talk about inflation within these countries we must not think of inflation of 1-2% per year, but of 1-2% per month and with a higher volatility than Bitcoin Cash.

In those countries we see a greater use of Bitcoin Cash, simply because once again man has changed tools: these citizens find it more efficient to use Bitcoin Cash instead of a local currency controlled by criminal governments.

This is how Bitcoin Cash protects the individual from inflation.

The individual does not have to trust their government or central bank but can finally use a supranational digital asset and immune to any attempt to manipulate the quantity in circulation thanks to its "difficulty adjustment algorithm".

Bitcoin Cash is unique because it is not tied to any organization, State or central bank. Bitcoin Cash cannot be geographically placed on a map and knows no borders, it is a scarce global asset . For the first time in modern history, a worker, an entrepreneur, or a farmer has the opportunity to save without fear of seeing their currency and savings lose value.

Can we consider it morally acceptable that an individual should suffer a loss of his/her purchasing power due to nefarious monetary policies? What responsibility does he/she have? What responsibility do central bankers have? Who controls the controllers? Has anyone ever been punished for causing hyperinflationary phenomena?

Gold and Bitcoin Cash?

One of the most famous investments when it comes to inflation protection is gold, which thanks to its longevity is now considered safe. However, gold suffers from some defects compared to Bitcoin Cash and which are always attributable to its circulating quantity which is in no way scarce or finite.

Miners can in fact control the rate of extraction. How? By increasing investments in the extraction and exploration of new fields.

In history there have been many inflationary crises caused by the quantity of gold in circulation which often varies: in Spain in 1500 for example when the expeditions of Columbus and the conquistadors returned to their homeland with ships loaded with gold from the colonies giving life to the "price revolution".

The production of Bitcoin Cash as opposed to that of gold is not elastic: if the computing power of miners were to increase, the production of Bitcoin Cash will always tend at the established rate since the protocol will make mining more difficult every 2016 blocks, about every two weeks.

Conclusions

According to various savings and investment professionals, Bitcoin Cash is the best tool to guarantee an individual the possibility of saving and protecting their wealth from hostile monetary policies operated by central banks and governments.

In 1685 John Locke and other Enlightenment thinkers called for the separation of Church and State.

Today the Bitcoin Cash community is practicing the separation of State and Money.