Over the years,
technology has improved by leaps and bounds, therefore making life more
cost-effective and efficient. Such technological improvements, however,
may not save citizens money as intended, due to inflationary efforts,
according to Diginex CEO Richard Byworth.

"Technology is just so
deflationary on many of our goods and services," Byworth told
Cointelegraph in an interview. Diginex stands as a company helping
produce framework for blockchain and crypto solutions. 

Byworth
remembers buying music albums on CDs decades ago, which sold for 16
pounds each, valued at approximately $25 in U.S. dollar terms at the
time. Fast-forward to present day. Customers can buy the latest albums
on iTunes within seconds, paying just $10 to $12 on average — less than
half of the prices seen twenty or so years ago, even given inflationary
damage over the last few decades.

Technology facilitated a
decrease in the cost of music production. Digital delivery removed the
need for costly physical products — all while increasing efficiency.

This
concept of technology as deflationary applies to countless other
categories as well. Food, housing and other goods and services have all
seen massive technological advancements through the years, essentially
bringing down their cost of production.

In the years following the
2008 financial crisis, Byworth explained he entered the crypto space
looking to protect his capital against inflation. Money devaluation
concerns have risen significantly in 2020, in line with COVID-19
prevention measures and various governments' efforts to fix economies
struggling as a result of such measures. Countries around the globe continue printing money as a solution. "It's gotten to a point of being frightening," Byworth said.

"If
you look at a trend line of monetary expansion over the last 40 years,
and then it's a fairly steady line until you hit about 2008. Then the
gradient just increases. It gets much steeper, and then suddenly, in
April of this year, you have a straight line up that is an increase of
25% on the entire increase that you've seen over that 40-year period —
you've seen that in four months."

When weighing
inflationary goals as part of an economic balancing act, the U.S.
central bank looks at the consumer price index, or CPI. The index
essentially shows the cost an average citizen pays for common purchases,
based on an array of products and services condensed into one number. 

Byworth
mentioned the U.S. Federal Reserve looks at CPI when determining
inflationary targets. Devaluing currency differs from CPI, however, as
shown in the cost of CDs. Certain products and services are becoming
less expensive due to innovation and efficiency. Central banks then
think they can raise inflation based on those figures, when really,
those goods and services should become cheaper, not stay the same.

"Having
that CPI target is really just a distraction," Byworth explained. "They
are never going to be able to get that CPI meaningfully higher unless
they lose control of the money itself," he added.  

"Effectively these central banks are fighting to get to a 2% number on a basket of goods that is very deflationary."

In
2020, amid money printing and COVID-19 difficulties, the public has
seen rapidly rising prices for assets and services that hold limited
quantities, such as certain real estate for example. These rising prices
stem from the aspects Byworth mentioned regarding currency devaluation.

Inflation, however, benefits governments with debt. "The U.S.
government has a gigantic amount of debt, so if the money is worthless,
then the debt is worthless," Byworth said.

"This is the
game that everybody is playing, and that inflation and monetary base
really means that the only way to protect your value and your wealth is
through sticking it in high value assets — so assets that people are
going to fight for." 

The Diginex CEO explained this as
rationale for the rising stock market in 2020, also giving a hat tip to
Bitcoin as an option. "This is why Bitcoin is going to continue to be
more heavily and heavily demanded," he said. 

A number of mainstream entities have piled into Bitcoin in 2020, seemingly looking at the asset as a hedge.

source link : https://cointelegraph.com/news/technology-itself-is-deflationary-diginex-ceo-says