#CryptoCPIWatch
CryptoCPIWatch is a conceptual framework designed to track inflation and purchasing power within the cryptocurrency economy. It works similarly to the traditional Consumer Price Index (CPI) but focuses on cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). Here's how it functions ¹:
- *Tracking Prices*: A diverse basket of goods and services that can be bought with cryptocurrencies is monitored.
- *Data Collection*: Prices are gathered from merchants and decentralized marketplaces that accept crypto payments.
- *Comparison Over Time*: The system analyzes price fluctuations in crypto terms, helping users understand whether their holdings are appreciating or depreciating in real-world value.
- *Stablecoin Reference*: Stablecoins like USDT and USDC serve as benchmarks to measure crypto inflation against fiat currencies.
The purpose of CryptoCPIWatch is to:
- Provide *Real Value Awareness*: Help crypto holders see whether their assets are losing purchasing power.
- Enable *Better Financial Planning*: Allow for smarter decision-making for savings and spending in crypto.
- Support *DeFi and Web3 Integration*: Serve as a key metric in decentralized finance (DeFi) apps for lending, borrowing, and investment strategies.
However, CryptoCPIWatch faces challenges due to the inherent volatility of cryptocurrency prices, making it difficult to create a stable index.
