Look, I'm not talking about it as a speculative asset, I'm just stating why it can be useful. And by inflation risk I meant risk of being devalued due to artificial increases in supply.
The thing is, users don’t care why the currency lost value, just that it did. Fixing one reason for that is only a start.
Inelastic supply means the price depends entirely on demand, so it will shoot up and down when demand changes. This is a speculator’s playground.
But another word for the situation causing a price increase is a shortage. Stability comes from elastic supply that responds to demand. Algorithmic stablecoins are snake oil, but they do appear to have more stable prices until they collapse.
To prevent that, there needs to be someone willing to buy back the currency when demand collapses (losing a lot of money in the process) rather than running away like everyone else.
Does Bitcoin have enough die-hard believers to do that? So far they’ve been able to stave off complete collapse and come back stronger, but in the future, who knows. When investors get spooked and sell off Bitcoin ETF’s, what happens?
