Inflation Has Reached 5.4%: Which Crypto Assets Should I Purchase to Protect Against Inflation?

Inflation is the progressive decline in the purchasing power of a currency. A quantitative measure of the pace at which purchasing power declines over time as reflected in an economy's average price level of a selected basket of goods and services.

A rise in the general level of prices, usually expressed as a percentage, indicates that a unit of currency currently purchases less than it did previously. Inflation differs from deflation, which happens when the purchasing power of money rises but prices fall.

Key Takeaways

• Inflation is defined as the rate at which a currency's value falls, causing the overall level of prices for goods and services to rise.
• Depending on one's perspective and the rate of change, inflation can be seen favourably or adversely.
• Those who own physical assets, like as real estate or stocks, may prefer to see some inflation because it raises the value of their possessions.

What is Hedging?

Hedging is commonly considered of as a sophisticated investing strategy, yet the laws of hedging are fairly simple. Hedging has grown in popularity as a result of the demand for and examination of hedge funds. Nonetheless, it is not well recognised as a word or a method. People may be unaware that they hedge a variety of goods in their daily life, many of which have nothing to do with the cryptocurrency market.

Hedging, like any risk/reward tradeoff, results in lesser profits than if you “bet the farm” on a light property, but it also reduces the danger of losing your shirt. Many hedge funds, on the other hand, take on the risk that individuals seek to avoid. They aim to benefit from the associated rewards by taking on this additional risk.

Key Takeaways

• Hedging, whether in your collection, business, or elsewhere, is the process of decreasing or transferring risk.
• Hedging is a tried-and-true approach for protecting your portfolio, house, and business against risk.
• Hedging is thought to make the run more efficient, in addition to protecting an investment from various sorts of risk.

How can you protect your cryptocurrency holdings against inflation?

When people begin to anticipate inflation, it no longer serves you well, because any gain from inflation originates from the fact that you outperform your expectations.

Stability benefits any portfolio; it works as a buffer when the cryptocurrency market hits a rough patch. However, if you shun bitcoin totally, your investment may not grow faster than the rate of inflation.

Bitcoin has been promoted as a portfolio hedge, and many cryptocurrency enthusiasts regard it as a gold substitute. Bitcoin's recent price volatility, on the other hand, demonstrates that it is far from a safe-haven asset.

Best crypto assets for inflation protection

Bitcoin(BTC)

Bitcoin is a peer-to-peer online currency, which means that all transactions take place directly between equal, independent network participants, with no need for any intermediary to allow or facilitate them. According to Nakamoto, Bitcoin was created to allow “online payments to be sent directly from one party to another without going through a financial institution.”

• Some concepts for a similar type of decentralized electronic currency predate BTC, but Bitcoin is the first cryptocurrency to be used in practice.
• Even after losing its unrivaled dominance, it is in large part to the pervasiveness of platforms that provide use-cases for BTC: wallets, exchanges, payment services, online games, and more.
• Bitcoin remains the largest cryptocurrency, with a market capitalization that fluctuated between $100 and $200 billion in 2020 and the current market price is ₹2,378,648.34
• The complete available supply of BTC is 18,760,362 BTC

Ethereum(ETH)

Ethereum is an open-source decentralized blockchain system with its own cryptocurrency, Ether. ETH serves as a platform for a variety of other cryptocurrencies as well as the execution of decentralized smart contracts.

• Through the use of its ERC-20 compatibility standard, Ethereum’s blockchain can host other cryptocurrencies known as “tokens” in addition to smart contracts.
• One of the key differences between the economics of Bitcoin and Ethereum is that the latter is not deflationary, i.e. its total supply is not limited.
• ETH current market price is ₹142,440.53 with a market capitalization of $250 Billion.
• The complete available supply of ETH is 116,750,844 ETH.

Dogecoin(DOGE)

Dogecoin (DOGE) is a cryptocurrency that is based on the popular “Doge” Internet meme and features a Shiba Inu as its logo. Because it was based on a dog meme, Dogecoin’s creators envisioned it as a fun, lighthearted cryptocurrency with a wider appeal than the core Bitcoin audience.

• Elon Musk, CEO of Tesla, stated on several occasions on social media that Dogecoin is his favorite coin.
• The altcoin also has a 1 minute block time and an uncapped total supply, which means that there is no limit to the number of Dogecoin that can be mined. You can mine Dogecoin either alone or as part of a mining pool.
• DOGE current market price is ₹13.45 with a market capitalization of $25.089 Billion.
• The complete available supply of Doge is 130.48 Billion DOGE.

Cardano (ADA)

Cardano is a blockchain platform for innovators, which offers tools and technologies required for building smart contracts and creating decentralized applications and protocols. Also, the users can send and receive funds instantly with the minimum amount of fees.

• The leading cryptocurrency of Cardano is known as “ADA.”
• ADA is available to purchase on various crypto exchanges, including BuyUCoin. Users can use it to pay for digital transactions.
• The current market price of ADA is ₹90.9 with a market capitalization of $37.61 Billion, while its total supply is 45 billion.

ADA ranks 5th in the list of largest cryptocurrencies by market capitalization.

Polygon MATIC

Polygon is a framework and protocol to integrate Ethereum compatible blockchain networks.

• Polygon network has its cryptocurrency known as MATIC.
• MATIC is available to purchase on various crypto exchanges, including BuyUCoin. Users can use it to pay for instant payments, Decentralized Apps, or payment API.
• MATIC’s current market price is ₹61.3 with a market capitalization of $5.07 Billion.
• The current circulating supply of MATIC is 6.33 Billion.

MATIC is ranked 20th in the list of largest cryptocurrencies by market capitalization.

Buy MATIC in India