You’ve probably noticed that a burger costs way more today than it did 10 years ago. This is inflation.
Many people think prices rise because businesses get greedy. But the real reason is usually that the value of the money itself is going down.
It comes down to supply and demand. If the government prints trillions of new dollars, there is suddenly much more cash chasing the same amount of goods.
Think of it like an auction.
Imagine ten people want to buy one bicycle. They each have $100 in their pocket. The price can’t go higher than $100.
Now, imagine the government gives everyone an extra $900. They all still want that same bicycle, but now they can bid up to $1,000.
The bicycle didn’t get better. There was just too much money available, so it drove up the price because there was still only one bicycle.
When more money enters the economy without more goods being produced, each dollar becomes worth less. You need more dollars to buy the same burger.
Bitcoin fixes this by having a fixed supply. No one can print more Bitcoin to dilute your share.
So understanding inflation isn’t about expensive goods; it’s about a melting currency.