World Economy

Bitcoin Inflation Rate Drops to 4%

Bitcoin Inflation Rate Drops to 4%Bitcoin Inflation Rate Drops to 4%

The Bitcoin monetary inflation rate decreased from 30-50% in 2011 to 4% this year, demonstrating the rapid mainstream adoption of the cryptocurrency in various markets.

Systematically and mathematically, the monetary inflation rate of Bitcoin is presumed to decrease at a fixed rate over time as the number of Bitcoins in circulation continue to rise at a fixed rate until it reaches its maximum capacity of 21 million Bitcoins, Yahoo reported.

Financial experts define Bitcoin as a deflationary currency, due to its unique characteristic and cryptographic system which strictly controls the possible volume of the cryptocurrency in the market.

Since the birth of Bitcoin in early 2009, mainstream financial media outlets and experts heavily criticized Bitcoin’s volatility, stating that a highly fluctuating volatility rate of a currency could negatively affect its users in a wide range of aspects. Particularly, merchants and workers receiving Bitcoins as a part of their payroll could be affected by the fluctuating market value of Bitcoin.

Three years later, the highly volatile market value of Bitcoin has become even steadier than established reserve currencies like the British pound.

The volatility rate of Bitcoin is directly attributable to the success and performance of the cryptocurrency. In 2010, 2011, 2012, 2013 and 2015, Bitcoin has continuously recorded high performances, becoming the world’s best performing currency for a few consecutive years.

In 2010, it recorded 314% increase in its market value. In 2013, it reached an all-time high rate of 5992%, introducing Bitcoin to a wider range of mainstream users and investors.

Although the price of Bitcoin was incredibly volatile in 2013 as its price increased by 5,992%, the high volatility rate of Bitcoin turned out to be beneficial for Bitcoin businesses, users and investors.