Inflation is the sustained increase in the general price level, often caused by money supply growth outpacing real output, reducing purchasing power.
Inflation reduces a currency's purchasing power over time. In fiat systems, it is influenced by central bank policy, fiscal deficits, and expectations. In cryptocurrencies, issuance policy (e.g., halving) and fee burns influence supply dynamics.
"If prices rise 10% while wages are flat, purchasing power falls—holders need more units to buy the same basket of goods."
"Bitcoin Cash follows a disinflationary emission schedule with halvings, lowering new supply over time."
Traditional metrics include CPI and PPI, each with limitations such as basket selection and substitution bias. On-chain, supply metrics and issuance rates provide transparent measures of monetary expansion.
"A declining block subsidy lowers the annualized issuance rate, contributing to disinflation even if transaction fee dynamics vary."
"Protocols without a hard cap may target steady inflation to incentivize validators, then offset with fee burns to manage supply growth."
Inflation affects savings, interest rates, and asset allocation. In high inflation, people migrate to harder assets or currencies. In crypto, predictable issuance and hard caps are valued as hedges against debasement risk.
"Households in high-inflation economies may save in cryptocurrencies to preserve value between paychecks."
"Investors often rebalance toward assets with fixed or programmatic supply when inflation expectations rise."
All terms and definitions may update as the Cryptionary improves.