Topic: Bitcoin and deflation - page 2. (Read 1280 times)

Come on franky1...  You're smarter than that.

If I start moving forward at 50 miles per hour, and every 4 hours I cut my speed in half (so after 4 hours I'm moving at 25 mph, and after 8 hours I'm moving at 12.5 mph, and after 12 hours I'm moving at 6.25 mph...)

That doesn't mean I'm moving backwards.  It just means I'm moving forwards slower.

You're trying to play the same mindgame that governments play when they say "the deficit is shrinking".  They hope the sheeple will confuse that and think it means the debt is getting smaller, when in reality it just means that while the debt is still growing, it is growing a bit slower than it used to.

The fact that the growth rate (speed) is shrinking doesn't mean that the total supply is shrinking (deflationary). It's still inflationary (more exists now than before). It's a lower inflation (growth) rate, as you yourself pointed out in your example, but the inflation rate is still positive.

It will eventually be deflationary (less exists at a given time than before), but only when the quantity lost or destroyed over a reasonable amount of time is more than the amount created over that same reasonable amount of time.

its deflationary

dont think of it from the point of 'every 10 minute it increases by 50btc' which a sort sighted view point

instead think of it from example
after block210,000 10.5mill coins were made and 10 minutes later 25 coins are added
growth is
0.00023809524% (10,500,025)
10 minutes later growth is
0.00023809467% (10,500,050)
10 minutes later growth is
0.00023809410% (10,500,075)

as you can see growth drops
EG
block 1
50 total 50
block 2
50 total 100 growth=100%
block 3
50 total 150 growth=50%
block 4
50 total 200 growth=33%
block 5
50 total 250 growth=25%

One neglected aspect of inflation could be governments tendency to destroy a nation's wealth, productivity and innovation through inefficient and wasteful spending.

It is possible that such inefficiencies are a main contributing factor behind state issued currencies losing buying power.

Bitcoin not being pegged to any existing state or government could serve as an alt explanation for its good inflation metrics.

As long as bitcoin is being generated by mining, it is inflationary.

However, as the production gets slower after a few halvings, the inflation rate will be lower than the inflation rate of the real world currencies- this is when bitcoin economy enters deflation.

There are some addresses that act as burner addresses and thus have Bitcoin in them that will hypothetically never be recovered, however you never know and someone might get it one day.

There are no mechanics in Bitcoin to counteract any sort of hoarding or destruction of Bitcoin, it just all keeps moving until there's nothing left, and if it gets to that point then Bitcoin dies due to no supply. As for whether or not that will ever happen, maybe in the far future, but it's a non-issue right now.

It seems to me that such terms for Bitcoin are irrelevant because only Fiat can be subjected to inflation or deflation. Bitcoin is a self-sufficient currency, which in itself regulates its value depending on the demand.

12.5 new bitcoins are created and released into the economy every 10 minutes on average.

As such, the supply of bitcoin is currently inflationary.

Over time, the amount of new bitcoins created will shrink (cut in half approximately every 4 years).

Eventually the number of new bitcoins created will be less than the number of bitcoins permanently lost or destroyed.  At that point the supply will finally be deflationary.

With a deflationary supply, the price should be higher for any specific demand.  As such, your bitcoins will have more buying power.  You'll be able to buy the same amount of stuff with less bitcoins.

So, while the total number of bitcoins will shrink, the number of bitcoins that you'll need to spend to acquire something will also shrink.  Therefore there won't be as many bitcoins needed.  Instead of the  2 milli-bitcoins (mBTC) you'd need to spend for a BigMac today, you'll only need to spend 0.2 mBTC (or 0.02 mBTC, or 0.002 mBTC).

As the supply continues to shrink, the price should be even higher for any specific demand.  Instead of spending 0.002 mBTC (which could be called 2 micro-bitcoins) on that BigMac, you'll be able to spend 0.2 micro-bitcoins or 0.02 microbitcoins.

Note that at that point we're talking about 1 bitcoin being worth $120 million.  We're going to need a LOT of deflation before we get to that point.  Perhaps a few centuries.  It's extremely likely that bitcoin will be replaced with something newer and better before it gets to be 500 years old.

I think the intention was to make it deflationary. This way it keeps gaining value over time while fiat loses value.

If somebody wants to hoard bitcoin, more power to them. Nobody is holding a gun to a person's head forcing them to pay $10,000 for a single coin.. it's their choice.   Owner of commodities invest in them because they want to hold onto or increase their purchasing power.  You can use gold to buy shit, but it's also an investment. Same with bitcoin.

I was thinking about how great bitcoin is vs combatting inflation but what about deflation?

Say bitcoin gets lost or if there was a malicious intent of destroying / hoarding bitcoin, are there any mechanics within bitcoin that address this?

Am curious but this is one of the largest problems i could think of if btc were ever widely adapted