⚡Bitcoin: Easing🆚 Hardening⚡

🤔What is quantitative tightening and how is it different from asset purchase programs known as quantitative easing? We did some research to help understand these financial concepts dear reader.

✍🏻Quantitative tightening refers to when an asset automatically becomes harder over time. It refers to the difficulty of producing a new unit, while paper bills increase in quantity until they lose their value in decades, #Bitcoin will preserve and increase its value due to its monetary policy and architecture.

🖨️Quantitative easing consists of Central Banks buying government, corporate and mortgage-backed securities assets in exchange for newly printed currency to provide more liquidity. In a crisis you have more assets and less cash. When the value of those assets falls you find that they are worth less. Quantitative easing satisfies the immediate need for cash, but it comes at a high price.

🏦When the crisis subsides it is difficult for the Central Bank to withdraw this cash from circulation. Those who received the new cash will start spending, causing the prices of the assets and goods they spend on to rise. This is why the fiat system becomes weaker over time.

🟠Quantitative tightening is a concept in #Bitcoin's algorithmic monetary policy. Its protocol makes it impossible to make unilateral monetary policy decisions, such as bailouts funded by quantitative easing programs. Also its scheduled supply and demand shock every 4 years.

↔️So every decline in the inflation rate is its quantitative tightening event. Its stock-to-flow ratio, the total amount in circulation added to the new amount issued, the higher the stock-to-flow ratio, the "harder" the asset is and the more immune it is to sudden increases in supply.