Inflation refers to the decrease in the purchasing power of a currency over time. For example, the purchasing power of US$100 in the 1950s is estimated to be equal to the value of $1,000 today. Therefore, if you had $100 in the 1950s, you would have been better off spending that money versus keeping it under the mattress for 70 years, as $100 in the 1950s had much greater purchasing power than today. Inflation is managed by central banks to increase circulation and decrease hoarding. In contrast, deflationary assets are those where purchasing power increases over time. Bitcoin, which has a fixed supply of 21 million, is a good example of this; if you owned one bitcoin 10 years ago and stored the private key under your bed, it would be worth multiples more today . This creates a natural incentive for vendors to accept deflationary currencies for goods and services.