Mention “deflation” and the first thing people think of is the Great Depression of the 1930s. But the worst-ever deflation going on right now is in the Bitcoin world. It’s not that Bitcoins are losing value; this year, Bitcoin is up 64-fold. As a result, prices of real things in terms of Bitcoins are plummeting.
For this article, I created a Bitcoin Consumer Price Index1 that’s the exact equivalent of the U.S. Bureau of Labor Statistics’ Consumer Price Index. The only difference is that it measures prices of goods and services (from food to clothing to gasoline to haircuts) in terms of Bitcoins instead of dollars.