Inflationary pressures is a term used to describe the rising prices that can occur when too much money is created and put into circulation. This happens when central banks print money or governments borrow large amounts of money to pay for public spending, resulting in an increase in the overall supply of money. Inflationary pressures can also be caused by high levels of consumer demand, higher production costs due to increased wages or raw material prices, or increases in taxes and government fees.
When inflationary pressures exist, it means that there are more dollars chasing after fewer goods and services which results in a rise in prices. This usually leads to an erosion of purchasing power – meaning that people will have less purchasing power as their dollar buys them fewer items than before. In extreme cases, hyperinflation can occur where prices rise so quickly that it renders currency virtually worthless.
The impact of inflation on cryptocurrencies is debatable but generally speaking cryptocurrency assets tend to fare better than fiat currencies during times of inflation because they have a fixed supply which cannot be changed by any central authority (unlike fiat). Cryptocurrencies like Bitcoin also offer users greater control over their own finances compared with traditional banking systems as well as providing other advantages such as lower transaction fees, faster settlement times and increased privacy/security when making payments online or sending funds abroad.
However despite these benefits cryptocurrencies still remain volatile investments with no guaranteed returns and investors should always do their research carefully before investing any capital into digital currencies
