Inflation vs Dollar Depreciation: What's the Difference?
A dollar in 1970 had the purchasing power of roughly $8 today. Your grandparents were not exaggerating when they said "things used to cost a nickel." The dollar did not gain value — it lost over 87% of its purchasing power in one lifetime.
Think of inflation as prices going up in your local grocery store. Dollar depreciation is your dollar buying less when you travel abroad. Both can happen together - like your grocery bill AND vacation getting more expensive.
Quick comparisons:
- •Inflation: Basket of goods gets more expensive.
- •Depreciation: $1 buys fewer euros, yen, or fewer shares of stock.
- •Both can happen together or separately depending on global conditions.
Inflation is prices going up. Depreciation is the dollar going down. They feel the same but have different causes — and understanding the difference is essential to understanding why Bitcoin was created.
Test Your Knowledge
3 questions · Passing score: 75%
Enjoying these lessons?
Get a free Bitcoin lesson in your inbox every week. Join thousands of learners.
Free forever. No spam. Unsubscribe anytime.