When economists discuss inflation, 99% of the time that discussion is about fiat currency inflation. However, cryptocurrencies have inflation rates as well, and this inflation rate is equivalent to the newly minted supply per year divided by the circulating supply at the beginning of the year.
Using this formula, here are the inflation rates for several major cryptocurrencies: Dash 6.1%, EOS 5%, Ethereum (ETH) 4.5%, Litecoin (LTC) 4.3%, Dogecoin (DOGE) 4%, Monero (XMR) 2.6%, Bitcoin SV (BSV) 1.8%, and Bitcoin Cash (BCH) 1.6%.
The cryptocurrencies which have the highest inflation rates include Zcash (ZEC) at 28.1% and Ripple (XRP) at 27.2%. Inflation rates this high means that the minting/release of new coins is applying major downward pressure to the Ripple (XRP) and Zcash (ZEC) markets long term.
Indeed, a past article on Crypto.IQ discusses how the Ripple (XRP) market is constantly under assault by dumps from Ripple Labs, and therefore it’s not wise to try and hold Ripple (XRP).
The cryptocurrency with the lowest inflation rate is Bitcoin (BTC), with an inflation rate of 1.5% per year. Bitcoin (BTC) did not have the lowest inflation rate among major cryptocurrencies until the May 12 block halving, which slashed the inflation rate from 3.6% to 1.8%. The Bitcoin (BTC) inflation rate then declined a bit more to 1.5% due to the post-halving slowdown in hash rate.
Notably, for the first time ever Bitcoin (BTC) now has a lower inflation rate than the global fiat average. In fact, now the Bitcoin (BTC) inflation rate is only about half of the average inflation rate of global fiats as can be seen in the above chart.
Ultimately, the fact that Bitcoin (BTC) now has a much lower inflation rate than major fiat currencies is a bullish factor. This is because with all other factors held constant, Bitcoin (BTC) will gain value relative to fiat because it has a lower inflation rate.
On a final note, Bitcoin’s (BTC) advantage will likely be enhanced further due to mass money printing amid the Coronavirus Pandemic, which is likely to cause a significant increase in fiat inflation rates worldwide.