Fiat inflation has cost Bitcoin hodlers 20% over the past decade

Since 2010, inflation has turned $1 into 84 cents while $1 invested in Bitcoin would be worth $274,000.

Bad news - the increase in the Bitcoin price over the past decade may have been overstated because of the accompanying fiat inflation.

Since Bitcoin is typically denominated in fiat - United States dollars usually - it is not immune to its depreciation.

In the decade that followed the economic crisis, the U.S. enjoyed some of the lowest inflation in history, which hovered around 2% annually.

Over the decade, this added up to almost 20%. Thus, if we use the 2010 dollar as our base and apply its subsequent depreciation to the price of Bitcoin, then the current price of $10,466 turns into $8,770.

On the contrary, if we compare the performance of Bitcoin and USD in the last decade, then there is no comparison.

One dollar invested in USD would have turned into 84 cents, while one dollar invested in Bitcoin would be worth $274,000.

Bitcoin is not immune to inflation either, but that might over complicate the story somewhat.

As long as the fiat inflation rate stays low and Bitcoin continues to appreciate at a rapid pace that it has done until recently, the effect of fiat inflation may be negligible for most investors.

The only way to escape it completely would be to stop denominating Bitcoin in fiat.