What causes inflation, and what does it have to do with crypto? - Crypto in Plain English - Episode 285 - by cryptohunt.it

What causes inflation, and what does it have to do with crypto?

Welcome to the Cryptohunt Jam, where we spend one minute a day to explain crypto. In plain English.

Inflation is a hot topic these days, but do you actually know what causes it? And did you know that crypto's birth story is deeply linked with inflation?

Well then, let's dig in!

Inflation it the rising cost of goods and services in an economy. It's quite simple - if a loaf of bread costs $5 today and $6 next week, then that is inflation.

And as scary as that sounds, mild inflation is quite normal. When grandpa tries to give you 25c to buy an ice cream cone, he's not trying to be stingy. That's just what it cost back then and he hasn't adjusted. Economies grow, people make a little more money every year, so they can afford higher prices. The US Central Bank has a stated goal of keeping inflation around 2% per year for example.

But other things than economic growth can cause inflation, and often too much of it. The prices of things you buy are also affected by material costs. Like during Covid when things couldn't be made, their prices shot up.

Another is governments printing money. Many governments around the world created massive amounts of money just during the pandemic - and where there is more of something, people value it less.

But have governments taken it too far, with inflation reaching double-digits? Satoshi Nakamoto, the inventor of Bitcoin, likely thought so even way back in 2008. Bitcoin is widely thought to be a reaction to governments' power to control their currencies, which is why blockchains were invented to be decentralized.

And now you know what blockchains and inflation have to do with each other... Think about it next time you get gas or go grocery shopping. And tomorrow, we’ll dig into the opposite: How governments intend to get us out of this mess by raising interest rates.

This podcast is produced by Cryptohunt.it the easiest place to learn crypto. Copywriting is done by Arndt Voges, Social Media is done by Brett Holleman, Design is done by Carmen Rincon and my name is Christian Byza, Co-Founder of Cryptohunt and I am your host of this daily show.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.