HEATH MUCHENA: The 21-million reasons bitcoin matters in a world of infinite fiat

Let’s call it like it is: the global economy is doing a high-wire act and the safety net below is looking sketchy. Between America’s ambitious industrial revival, relentless money printing and the Federal Reserve’s balancing act of keeping inflation in check without tanking markets, we’re in uncharted territory. The rules of the game are shifting and if you’re not paying attention, you’re already behind. 

Here’s the kicker: bitcoin, the once-controversial digital upstart, is emerging as the ultimate hedge against this madness. Love it, hate it, or just don’t get it, it’s time to talk about why bitcoin might just be the financial ace up your sleeve in the economic circus. 

For decades the US economy has relied on central banks printing money to prop up financial markets. This strategy has disproportionately benefited the wealthy, who hold most of the assets that rise in value with such monetary easing. But when Covid-19 hit everything changed. Stimulus cheques and enhanced unemployment benefits put cash directly into the hands of American citizens, sparking a surge in consumer spending and briefly lowering the debt-to-GDP ratio. For once, the velocity of money — the rate at which cash flows through the economy — actually increased. 

However, this newfound economic energy came at a cost: inflation. Prices soared as demand outstripped supply and the Fed responded by hiking interest rates. While this temporarily cooled inflation it reignited a familiar pattern — financial tightening that hits ordinary savers hardest, erodes purchasing power and widens the gap between rich and poor. The economy now sits at a crossroads, with policymakers caught between the need to stimulate growth and the risk of fuelling further inflation.

This is where bitcoin enters the conversation. In a world where fiat currencies can be printed at will, bitcoin stands apart as a finite asset. Its supply is capped at 21-million coins, making it immune to the devaluation pressures that plague traditional currencies. This scarcity, combined with its decentralisation, positions bitcoin as a hedge against the systemic risks of modern monetary policy. 

Bitcoin’s appeal isn’t limited to its scarcity. Unlike gold, which serves a similar role as a store of value, bitcoin is infinitely portable and divisible, making it better suited for a digital-first world. It’s also a global asset, untethered to any one country’s economy or policies. This has made it particularly attractive to individuals in nations with unstable currencies, as well as to investors seeking refuge from the dollar’s gradual decline. 

The economic experiment under way in the US only strengthens bitcoin’s case. To fund its ambitious reshoring of industries such as semiconductors, electric vehicles and defence manufacturing, the government will rely on trillions of dollar in subsidies, tax breaks and cheap loans. This is likely to result in a flood of new debt, driving up the national deficit and weakening the dollar further. While such policies may boost nominal GDP, they will also erode the real value of savings held in fiat currencies. 

History has shown that when liquidity floods the system asset prices rise. But unlike stocks or real estate, which remain tied to the underlying health of the economy, bitcoin thrives precisely because it is decoupled from these dynamics. Its performance since 2020 has consistently outpaced traditional assets, a trend that seems poised to continue as the US embarks on this next chapter of fiscal experimentation. 

For those looking to navigate this shifting financial landscape the strategy is clear: diversify, stay informed and consider bitcoin as a cornerstone of your portfolio. While its volatility can be daunting, its long-term trajectory as a hedge against monetary instability is hard to ignore. While cash is losing value and traditional investments are increasingly tied to unpredictable government policies, bitcoin offers something rare: freedom. 

The US’ economic ambitions may lead to short-term growth and innovation, but the long-term costs — rising debt, declining fiat credibility and a global search for alternatives — are unavoidable. Bitcoin isn’t just a speculative asset any more; it’s a necessary tool for preserving wealth in an era of fiscal and monetary uncertainty. 

In a world where money can be created out of thin air, bitcoin’s finite supply and decentralised nature make it a beacon of stability. The rules of the game are changing and for those willing to adapt, bitcoin offers a chance not just to survive, but to thrive. It’s not just the future of finance — it’s a lifeline in the storm of modern economics.

• Muchena is founder of Proudly Associated and author of ‘Artificial Intelligence Applied’ and ‘Tokenized Trillions’.