Is Bitcoin a Hedge on Inflation?
My family and I recently moved from the northeast, where I’ve lived most of my life, for Florida. It’s bittersweet to leave a home you love for a new world, but we’re excited for our new adventure. Depending on what side of the SF/Miami debate you sit in the tech community you sit, you may think that’s a contrarian move or a consensus move. I still think Florida is a contrarian place to move. We’re only a few months into the hype cycle, which will probably die down as it always does, then we will see the sustainability of the trend. That will take a while.
Because of the move, I’ve had less time to write, but I did get to record a Racket earlier today. Racket is a portfolio company of ours that lets users quickly record sub-9 minute podcasts. It’s a fun way to verbally explore ideas real time. Today I did a Racket about the fun debate on Twitter sparked by Nassim Taleb about whether Bitcoin is or isn’t a hedge on inflation. You can listen here.
Short answer: Bitcoin almost certainly isn’t a direct hedge on inflation. Inflation swaps or TIPS would serve that purpose. It might be an indirect hedge, but we have so little historical data, and there is so much speculative volatility, it’s hard to say how effective Bitcoin will be as any sort of hedge against inflation. If you’re really trying to hedge inflation, there are probably better assets. If you’re trying to speculate on inflation, Bitcoin may be for you.