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Why You Need To Keep Your Savings in Bitcoin

If you’re still storing the bulk of your savings in fiat currency like U.S. dollars, you might face a nasty shock soon when you realize it’s worth far less than it once was. The inflation rate has increased rapidly after the fallout from the pandemic, and many expect it to continue — all of this is exactly why you should have savings in bitcoin.

Let’s look at why inflation is stealing your money and what you can do about it.

Inflation and what it means

The Bureau of Labor Statistics (BLS) recently released its inflation report for October 2021, which showed that the Consumer Price Index (CPI) had increased 6.2% over the last twelve months. This is the highest CPI increase since November 1990.

But what does it all mean?

Inflation is a measure of the rise in prices, and the CPI is the most common way to measure this — it purports to track how much the prices of common goods and services have increased.

So, a 6.2% increase in the CPI means that you’d have to spend $106.20 on a grocery trip that cost you $100 a year ago for the same items. The “real value” of the dollar adjusted for inflation is known as purchasing power — and for the dollar, it seems to be decreasing fast.

The problem

This is an issue for many reasons, one of which is that every dollar you save is progressively becoming worth less. And given we’re living in a low-interest-rate era, you can’t rely on so-called high-yield savings accounts to fight off inflation — the average savings account now pays just 0.06% in interest.

Why has this happened?

Because, among other reasons, given the choice between protecting the dollar’s purchasing power (through high rates) and stimulating economic growth (through low rates), the Federal Reserve (Fed) chose the latter.

We could argue all day about whether this approach has some merits or is an outright attack on average savers, but one thing is for sure: if you care about the purchasing power of your money, you can no longer rely on the banks or even the currency.

Now, this problem might be spiraling out of control. The pandemic saw a dramatic increase in “money printing” to give out stimulus checks to everyone in the U.S., thus worsening the inflation problem. What can you do?

"I like to call this the easy money trap: anything used as a store of value will have its supply increased, and anything whose supply can be easily increased will destroy the wealth of those who used it as a store of value." - Saifedean Ammous

The alternative

Fortunately, there are still a few assets that haven’t seen their purchasing power eroded by inflation.

One of them is gold, which has always served as a store of value since it has to be mined, meaning a limited quantity exists in the world. The other is bitcoin (and other cryptocurrencies).

Like gold, bitcoin is (digitally) mined, and there’s a finite amount available. It’s also decentralized; thus, there are no middlemen (like the Fed) inflating or manipulating its value. Instead, complex cryptographic protocols ensure that the protocol runs smoothly and your value is protected.

Bitcoin is not only a great store of value, but it also provides a massive opportunity to grow your wealth.

Bitcoin was the best-performing asset of the past decade, and it continues to outperform. The price of bitcoin increased by more than 200% in 2020. So instead of losing purchasing power, your purchasing power would have increased if you had savings in bitcoin. Put another way, instead of affording fewer groceries at the grocery store; you could get more – much more.

Rest assured, when you hear about the price of bitcoin increasing; it’s due mainly to supply and demand. The amount of available bitcoin is decreasing, while the demand for bitcoin is growing as the world recognizes the value of Bitcoin.

"People’s choices are subjective, and so there is no “right” and “wrong” choice of money. There are, however, consequences to choices" - Saifedean Ammous

Ready to grow your savings in bitcoin

Before you do anything drastic, we recommend researching more about inflation, cryptocurrencies, and other investment options — after all, this is your hard-earned money we’re talking about.

But if you decide that Bitcoin is the path for you, we’ve got your back. To learn more about how you can get started with bitcoin, check out our free resources.

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