Is using Bitcoin a good way to fight inflation?

By Timothy B. Lee Updated Nov 3, 2015, 10:03pm EST

In recent years the dollar has had an inflation rate of around 2 percent, and it has been higher in the past. Some have advocated using Bitcoin as an alternative to inflationary fiat currency.

But Bitcoin is not a good choice for preserving the value of your cash. Bitcoin’s value is extremely volatile. While Bitcoin’s value has generally increased in the last few years, it has also experienced dramatic declines in value. For example, the currency lost more than half of its value in 2014.

Hence, Bitcoin should be seen as a high-risk investment like a technology stock, not as a stable store of value. If you want a hedge against inflation, the United States Treasury offers inflation-protected bonds for just this purpose.

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