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1. Beginner Course

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  1. 1. What are these cryptocurrencies?
  2. 2. Bitcoin - the story of a technological revolution
  3. 3. Satoshi Nakamoto, who is the creator of Bitcoin?
  4. 4. Vitaly Buterin – the creator of Ethereum
  5. 5. What is Blockchain, and how does it work?
  6. 6. What is an NFT token?
  7. 7. What is money?
  8. 8. Cryptocurrencies vs fiat money, which will win?
  9. 9. What is DeFi (Decentralized Finance)?
  10. 10. DeFi: opportunities, advantages and disadvantages of decentralized finance
  11. 11. What is an altcoin
  12. 12. Stablecoins - What they are?
  13. 13. Cryptocurrency wallet - what is it?
  14. 14. Why do we talk about bull and bear markets?
  15. 15. Security in the crypto market - what rules are worth following?
  16. 16. What is the seed phrase in cryptocurrencies?
  17. 17. Dogecoin and memecoin - what are they?
  18. 18. What is a Ponzi scheme?
  19. 19. What is Ethereum? 
  20. 20. What is a soft and hard fork?
  21. 21. Blockchain - examples of use
  22. 22. Is blockchain safe?
  23. 23. Smart Contracts - what are they?
  24. 24. Liquidity pools in the cryptocurrency market
  25. 25. What is cryptocurrency mining?
  26. 26. What is the mining difficulty?
  27. 27. Inflation and its effects on financial markets
  28. 28. What is compound interest, and how does it work?
  29. 29. Cryptocurrency portfolio diversification
  30. 30. Blockchain and NFT games - how to make money on them?
  31. 31. Decentralized dApps - what are they?
  32. 32. What is Proof of Work (PoW) and what is Proof of Stake (PoS)?
  33. 33. What is Proof of Burn (PoB)?
  34. 34. What is the Proof of Authority (PoA) consensus mechanism?
  35. 35. What is CBDC - central bank digital money?
  36. 36. What is Cryptocurrency Airdrop all about?
  37. 37. What are the types of blockchain networks?
  38. 38. Key differences between ICO, IEO and STO
  39. 39. What is IoT - the Internet of Things?
  40. 40. What is the difference between Circulating Supply and Total Supply?
  41. 41. Everything you need to know about gas fees in Ethereum!
  42. 42. The most important cryptocurrency acronyms/slang you need to know!
  43. 43. Halving Bitcoin - what is it, and how does it affect the price?
  44. 44. What is the Fear and Greed index for cryptocurrencies?
  45. 45. APR versus APY: what is the difference?
Lesson 27 of 45
In Progress

27. Inflation and its effects on financial markets

The current situation of market prices makes most of us come across the concept of inflation. Today, that’s what we’re tackling. What is inflation, and how does it distort the functioning of the market? What does this one mean indicator?

Inflation – definition

Inflation, it’s nothing more than a price increase in goods and services. In real terms, we buy less than, for example, in the previous year. From an economic perspective, it is then inflation, that is, a decrease in purchasing power of money. What does this force actually mean? It is the ability of money to purchase the above-mentioned goods and services. During inflation for the same amount of money, we buy fewer things in the store, and we notice price increases in the store.

We wrote about money and its most important features here. It is worth recalling the most significant issues before moving on to the next paragraphs of today’s lesson.

It is then said that “something” took money from our wallet. Ultimately, the amount we have decreases, an inflation added to this is an increase in the prices of goods and services. Then we encounter an increase in the money supply and the accumulation of one’s wealth in other tangible and material values.

It is worth noting that in the process of inflation, only one price does not suddenly rise. During this period, there is often discussed the phenomenon of continuous price growth and to average them, it is created by price indices. We are talking about a set of goods and services that are the most popular among consumers at a given moment and their prices are compared, for example, with the previous year.

Types of inflation

  1. Demand inflation (monetary) – the reason for the increase in prices on the market is definitely greater demand in relation to supply. She is also called monetary inflation because there is an excessive amount of money in circulation during this period.
  2. Cost inflation – the price of goods and services increases because the cost of production of the goods increases.
  3. Structural inflation – the production structure does not change in relation to the new needs of buyers.

Inflation types

  1. Creeping – occurs when the price increase does not exceed a few percent per year. It is minimally invasive and does not cause changes in economic processes. Creeping inflation, It can be controlled.
  2. Walking – prices increase by several percent, which causes a stir on the economic market.
  3. Galloping – we deal with it when the price increase on the market is already a two-digit number. Social and economic tensions arise (strikes). The economy is not growing and developing. An example may be double-digit inflation in our country and in the world.
  4. Hyperinflation – everything happens in the blink of an eye. Money loses its value rapidly, prices increase day by day. This is generally due to ill-considered budgeting of state expenditures by the government.

Causes of inflation

Among the most popular are certainly:

  • Too much money in the economy.
  • Lowering interest rates.
  • Quantitative easing.
  • State’s financial troubles.
  • The government has to pay a budget deficit.
  • Increase in employees’ salaries.
  • Increase in prices of energy resources.
  • High taxes.
  • Monopoly in the economy.


They are definitely deplorable. Inflation is never good for the state and its citizens:

  • Decrease in the value of money.
  • Decrease in the value of savings.
  • Economic activity is unstable.
  • Strikes.
  • Lack of motivation among society to change.
  • Higher nominal income.
  • Due to the high prices of energy resources, production is limited.
  • Difficulties in foreign trade.

How does the Central Statistical Office calculate the level of inflation?

To measure inflation, the Central Statistical Office uses the price levels of goods and services in two comparable periods. Additionally, it uses information on the structure of household expenditures. The data it collects from the Central Statistical Office that’s over 200,000 prices per month. The whole country is being investigated.