This is Part One of a multipart series that aims to answer the following question: What is the “fundamental value” of Bitcoin?
In recent months — and throughout 2020 amid the COVID-19 pandemic and its negative effects on the economy — central banks around the world have issued unprecedented quantities of money in order to try to counter an inevitable economic crisis.
We live in a world where each generation of newly issued money, printed by central banks, leads to inflation, or the reduction of the purchase value of the currency itself and consequently, an increase in the price of goods.
To give an example, last year alone the amount of U.S. dollars printed equals almost 20% of all dollars generated throughout time, based on the registered value of the money supply of dollars in the world.
Consequently, the more dollars that are printed, the more we can see their worth decreasing over time. The opposite of inflation is deflation — in other words, as time passes, the more a currency appreciates and its purchasing power grows.