When it comes to explaining the concept of money to people, there is one aspect a lot of consumers tend to forget. Money is only of value to our society because it provides us with purchasing power, and fiat currencies are not capable of maintaining that level of usefulness. Bitcoin, while suffering from mild price swings on a regular basis, is the only currency that can provide an increase in purchasing power over time.
Fiat Currency’s Declining Purchasing Power
Figuring out how money works is not all that difficult, as the concept is entirely defined by how much one can do with the currency received. In the world of fiat currency, everything we buy or sell is priced at a certain value, and that amount needs to change hands if people want to purchase something in particular.
Some people may have noticed how they can purchase less and less with the same amount of money throughout the years. This is a direct result of the decline in purchasing power, which is very common when dealing with traditional fiat currencies in any part of the world.
It is not uncommon to see a decline in purchasing power when dealing with fiat currencies either. Very few people are aware of how this type of currency loses a portion of its value over time, which is only normal, as there is no limited supply cap put on fiat currencies. If needed, central banks can simply keep on creating more fiat currency, which makes the previous supply less valuable than it ever was before.
Whenever more money is printed by a central bank, it is often advertised as being a way to boost the economy. For example, when the Federal Reserve decides to boost US economy, they will simply print more US Dollar bills in an attempt to bring more funds into circulation. But at the same time, the purchasing power of consumers declines, as the total value of the money in circulation did not increase, yet it had to be divided by more fiat currency bills in circulation.
It is important to note this will be the eventual downfall of that fiat currency system. Printing more money will only deepen the pit central banks have dug for all people on this planet, and filling that pit by digging another pit is not doing anyone any favors. As a result, the financial ecosystem crumbles, and consumers are left to pay off debts that are becoming increasingly difficult to settle as the value of their money declines.
Bitcoin Has Room For Purchasing Power Growth
Unlike traditional fiat currencies, Bitcoin is a create of a completely different nature. Whereas the value of Bitcoin can go up or down by minor margins these days, there is equally as much room for growth as there is for a decline. If Bitcoin were to become more valuable – as it has over the past twelve months – purchasing power per Bitcoin increases.
Granted, Bitcoin is still tied to fiat currency values when converting it to be used in the real world. But at the same time, consumers have a likely chance to receive more fiat currency – and more purchasing power – for the same amount of Bitcoin. There is no other currency that offers this type of prospect anywhere in the world.
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