<p>I'll try to fit this in an answer. I think you are confusing nominal and relative value. Inflation means that the 'value' of your money depreciates relative to other things. For example, in the year 2000 I could buy a bread for 1 USD. In the year 2015 I can buy a bread for 2 USD. This means that the dollar lost half of it's value relative to bread. But nominal 1 USD is still 1 USD and 1 bread is still 1 bread.</p>

<p>So in your example: today 1 BTC = 578.25 USD. If there is inflation of the USD (the value depreciates), then all else being equal BTC should appreciate against the USD (go up in nominal USD-value). So to work further with the bread-example. If in the year 2000 1 BTC would buy 500 USD then in 2015 1 BTC should buy 1000 USD. So the USD went down in value relative to BTC.</p>

<p>for more information:
<a href="https://en.wikipedia.org/wiki/Purchasing_power" rel="nofollow">https://en.wikipedia.org/wiki/Purchasing_power</a>
<a href="http://www.investopedia.com/terms/c/currency-depreciation.asp" rel="nofollow">http://www.investopedia.com/terms/c/currency-depreciation.asp</a></p>

CC BY-SA 3.0
2016-06-10T17:31:27.290Z
2016-06-10T17:31:27.290Z
tibo
<p>So, right now, 1 BTC (bitcoin) is worth ≈ 578.25 USD. But, with the inflation of the USD, how can 1 BTC still hold its value at 578.25? Why doesn't it decrease?</p>

<p>Let's set this example:</p>

<p>1 BTC = 1 USD.</p>

<p>Then, the USD loses half of its value; 1 USD is now actually worth 0.50. </p>

<p>Why won't the BTC lose half of its value?</p>

<p>I guess this principle applies to any currency and I can't seem to grasp the idea.</p>

<p>So, any help will be appreciate. </p>

<p>I also hope that you can understand my question and if you need clarification, please ask! </p>

CC BY-SA 3.0
2016-06-10T17:20:26.850Z
hmmz, you're talking about purchasing power I think, let's take your example: 
1 BTC = 1USD
If 1 USD loses half of it's value it's worth 0.5 'old' USD. If at the same time 1 BTC still equals 1 USD then indeed 1 BTC wil half lost half of it's purchasing power and will be worth 0.5 old USD....

maybe a more practical example:
1 BTC = 1 USD  --> and 1 USD buys 1 bread. 
If 1 USD loses half of its value, then 1 USD = half a bread
If 1 USD still equals 1 BTC, then also 1 BTC = half a bread

so both USD and BTC lost purchasing power. If BTC didn't lose purchasing power then 1 BTC = 2 USD
tibo
CC BY-SA 3.0
2016-06-10T17:24:46.337Z
maybe you'll find more info over here: https://en.wikipedia.org/wiki/Purchasing_power
tibo
<value><price-theory><bitcoin><price>
How can 1 BTC gain value in USD if inflation is happening?
Carlos Carlsen
# How can 1 BTC gain value in USD if inflation is happening?

(Asked by: username_0 on 2016-06-10)

So, right now, 1 BTC (bitcoin) is worth ≈ 578.25 USD. But, with the inflation of the USD, how can 1 BTC still hold its value at 578.25? Why doesn't it decrease?

Let's set this example:

1 BTC = 1 USD.

Then, the USD loses half of its value; 1 USD is now actually worth 0.50.

Why won't the BTC lose half of its value?

I guess this principle applies to any currency and I can't seem to grasp the idea.

So, any help will be appreciate.

I also hope that you can understand my question and if you need clarification, please ask!

**Tags:** value, price-theory, bitcoin, price

> **Comments:**
> **username_1**: hmmz, you're talking about purchasing power I think, let's take your example:  1 BTC = 1USD If 1 USD loses half of it's value it's worth 0.5 'old' USD. If at the same time 1 BTC still equals 1 USD then indeed 1 BTC wil half lost half of it's purchasing power and will be worth 0.5 old USD....  maybe a more practical example: 1 BTC = 1 USD  --> and 1 USD buys 1 bread.  If 1 USD loses half of its value, then 1 USD = half a bread If 1 USD still equals 1 BTC, then also 1 BTC = half a bread  so both USD and BTC lost purchasing power. If BTC didn't lose purchasing power then 1 BTC = 2 USD  
> **username_1**: maybe you'll find more info over here: https://en.wikipedia.org/wiki/Purchasing_power  

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## 1 answers

### Answer by username_1 on 2016-06-10. Score: 2 | Accepted answer

I'll try to fit this in an answer. I think you are confusing nominal and relative value. Inflation means that the 'value' of your money depreciates relative to other things. For example, in the year 2000 I could buy a bread for 1 USD. In the year 2015 I can buy a bread for 2 USD. This means that the dollar lost half of it's value relative to bread. But nominal 1 USD is still 1 USD and 1 bread is still 1 bread.

So in your example: today 1 BTC = 578.25 USD. If there is inflation of the USD (the value depreciates), then all else being equal BTC should appreciate against the USD (go up in nominal USD-value). So to work further with the bread-example. If in the year 2000 1 BTC would buy 500 USD then in 2015 1 BTC should buy 1000 USD. So the USD went down in value relative to BTC.

for more information:
<https://en.wikipedia.org/wiki/Purchasing_power>
<http://www.investopedia.com/terms/c/currency-depreciation.asp>


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