BITCOIN: THE BEST DEFENSE AGAINST DEVALUATION. 💰
💸 The value of the dollar loses value against inflation because inflation reduces the purchasing power of a currency. If there is inflation, the prices of goods and services increase, which means that more money is needed to buy the same things.
1. Inflation rate:
The annual inflation rate directly affects the purchasing power of the Chilean peso. If inflation is high, the real value of the peso decreases more quickly.
2. Central Bank interest rate:
The Central Bank of Chile has raised interest rates to control inflation. This may temporarily strengthen the peso, but it does not recover its lost value against past inflation.
3. Comparison with other currencies:
The value of the Chilean peso in the international market also affects its loss of value relative to foreign currencies.
In the long term, if inflation is not properly controlled, the Chilean peso will continue to lose value, which can negatively impact consumers' savings and purchasing power.
Despite its high volatility, Bitcoin has proven to be one of the most profitable assets of the past decade, outperforming even more traditional investments such as gold or stock indices. According to data compiled by Oliveira, Bitcoin has generated an average annual return of 184.96% since 2014. Although it has had some tough years, with dramatic drops of -58.6% in 2014 and -72.56% in 2018, its ability to bounce back and deliver impressive returns makes it an attractive investment option for those looking to overcome the loss of value of their local currency.
“Bitcoin is not just a currency, it is a wealth preservation strategy,” Oliveira said. In a context of such severe monetary depreciation, having money parked in assets that do not generate interest or in salaries that do not grow at the rate of inflation means a progressive financial erosion.