Nick Agar, founder of AXIA, spoke about hyperdeflationary assets and their value to crypto projects and space.
Nick Agar – Founder of AXIA
Agar begins by making a coin that aims to reduce supply over time. This is the exact opposite of inflation when supply is increasing. Both deflation and inflation affect the value of assets in different ways.
“The US dollar is the current reserve currency, so its currency system has a strong impact on the global economy. It is clear that the US dollar has continuously lost purchasing power since the gold standard was abolished by inflation.
Deflationary assets work when supply falls. This adds value as a decrease in supply causes the asset to become rarer over time.
“Since currencies are not valued in a vacuum and measured in terms of relative value, a deflationary instrument can protect against loss of purchasing power and can also be viewed as a store of value.”
While scarcity is a key factor, it doesn’t necessarily mean that value is tied to cryptocurrencies or assets. In Agar’s view, Bitcoin is an example of a deflationary asset. There are pitfalls, however.
“Many people see Bitcoin as a deflationary asset and therefore a store of value. This is mainly because Bitcoin has a limited supply and will never increase. So people can stick to the idea that it can stop the depreciation. ”
However, Bitcoin is only valuable to the extent that people believe it has value. People buy it in the hope that someone will pay more for it in the future, that is the law of supply and demand in business. Hence it is considered a speculative asset. ”
However, Agar stated that Bitcoin’s limited supply is a double-edged sword. It can lead to a price increase and thus incentivize people to keep. But then this undermines its intended use as a currency as people use it for speculative investment.
For Agar, the ultimate goal of deflationary cryptocurrency is to have an economic model that fights against the traditional custodian.
“We live in a world where many people work very hard but only take one step forward and two steps back due to a system that works against them. For this reason, a deflationary rather than an inflationary currency would be of great benefit to many people around the world when it comes to long-term preservation of wealth. ”
“The goal of deflationary cryptocurrencies is to protect against loss of purchasing power and to offer a store of value. They can also provide an additional way to make transactions and exchanges more efficient. Additionally, this brings the right level of currency competition to the market so that individuals can determine which instruments will best serve their own goals. ”
Overall, Agar sees cryptocurrencies as a fairer financial good for many.
“Cryptocurrency is more accessible than other financial instruments, it can be viewed as a store of value.”
While these are high ideals and goals, there are risks associated with any type of cryptocurrency investment.
“Do you know that if a token has no fundamental value beyond pure perception and trust, its value can fizzle out at any time. There is a clear risk, especially as the industry continues to grow. However, tokens that offer real and lasting fundamental value and utility will stand the test of time. ”
Join Bitcoin Magazine Telegram to keep track of news and comment on this article: https://t.me/coincunews
Mr. Teacher
According to BeinCrypto
Follow the Youtube Channel | Subscribe to telegram channel | Follow the Facebook page
Discover how DTX Exchange's historic achievement of 100,000 transactions per second on a layer-1 blockchain…
VanEck suggests the U.S. could reduce its national debt by 35% by 2050 through a…
President-elect Donald Trump named Bo Hines as the executive director of the presidential crypto council.
Explore the best new meme coins with 1000X potential. Learn how BTFD Coin leads with…
BlockDAG crosses $170.5M in presale success with BDAG250 bonus and Whitepaper V3 launch! Solana grows…
Discover why Qubetics, Toncoin, and XRP are the best coins to invest in right now.…
This website uses cookies.