Lesson 4
A dollar buys less every year
Prices slowly go up, so the same dollar buys a little less each year. This is called inflation. Pick a year and see what it did to one hundred dollars.
The line shows what one dollar from 1970 could buy in each later year. Data: US consumer prices (CPI-U, yearly averages, 1913–2025) from the Bureau of Labor Statistics.
Why does it happen?
Dollars are created by the US central bank and by banks when they lend, so the number of dollars keeps growing. Some inflation is even the plan: the Federal Reserve aims for prices to rise about 2% a year. That sounds small, but at 2% a year, prices double about every 35 years.
- Today$100
- In 10 years$82
- In 20 years$67
- In 30 years$55
What $100 kept in a drawer buys, in today's dollars, if prices rise 2% a year.
Source: the Federal Reserve, "Why does the Federal Reserve aim for inflation of 2 percent over the longer run?"
Money that nobody can print more of
- US dollar
- No limit. New dollars are created every year.
- Bitcoin
- At most 21 million. New bitcoin are still being created, fewer and fewer, until that limit is reached decades from now.
- Nano
- About 133.2 million, all of it already here. It was given out from 2015 to 2017, and no new Nano can ever be created.
Digital gold and digital cash
Bitcoin was the first to show that money can have a fixed supply that no bank or government can change. People often call it digital gold. Nano shares that idea, and adds what you saw in the earlier lessons: it moves in a second and costs nothing to send, so it works well as everyday digital cash.
A fixed supply is not a fixed price
Be careful with one thing: a fixed supply doesn't mean a fixed price. The price of Nano and of Bitcoin in dollars goes up and down, sometimes a lot. Nothing here is investment advice. This lesson is about how the money works, not about what it will be worth.
Sources
- Bitcoin FAQ (21 million)
- Nano documentation (~133,248,297 nano, distributed 2015–2017, the rest burnt)
See Nano and Bitcoin side by side, live, in Explore.