Bitcoin Halving Could drop Inflation Rate lower than central banks

hatshepsut93

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Quote from: DooMAD on February 26, 2020, 02:07:17 PM

Indeed. Over a long enough timeframe, Bitcoin can be considered deflationary, but not in the short term. To be fair, though, it is other of those things that Bitcoiners have generally struggled to agree on over the years, heh. Have a look at this stackexchange question from 6 years ago and the decidedly mixed answers given as an example: https://bitcoin.stackexchange.com/questions/19961/is-bitcoin-deflationary-and-inflationary-at-the-same-time

Bitcoin's inflation is also different from fiat inflation because the former is governed by code and it's very predictable even in the long run, while fiat inflation is constantly changing and is hard to predict, and in worst cases it can get out of control. I think Bitcoin at inflation rate of 2% per year is more attractive as a store of value than fiat with the same inflation, since its long-term inflation is lower, so it gets priced in to some extent.

o_e_l_e_o

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Quote from: DooMAD on February 26, 2020, 02:07:17 PM

To be fair, though, it is other of those things that Bitcoiners have generally struggled to agree on over the years, heh.

People confuse inflation with the rate of change of inflation. Bitcoin is currently inflationary because the supply is increasing. The rate of change of inflation, however, is decreasing with every halving. Only once the number of coins being irretrievably lost outnumber the number of coins being mined will bitcoin become deflationary. This doesn't necessarily mean we have to wait til 2140. After the 11th halving circa 2052, we will only be generating fewer than 1,300 new BTC each year. All it will take is one major loss a year like the alleged loss of 1,550 BTC last week to push bitcoin in to deflation.

Unless, of course, you consider maximum supply instead of circulating supply. In that case, since you know there will only ever be 20,999,999.9769 BTC, and you consider that any coins lost are subtracting from that total, then you could argue bitcoin is, and always has been, deflationary.

migws

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Quote from: Asuspawer09 on February 26, 2020, 11:09:53 AM

As Satoshi Created the Bitcoin and designed a protocol to be an inflationary currency as the value of bitcoin is volatile. Also as bitcoin’s inflation always decreases every four years because of this bitcoin halving. As of now, the BTC’s inflation rate is around 3.6% and we are expecting it to drop to 1.8% after the bitcoin halving event. Comparing it to the average central banks, the cryptocurrency has a lower inflation rate.

“When someone tries to buy all the world’s supply of a scarce asset, the more they buy the higher the price goes.”

As the supply of bitcoin is limited, the rewards of the miners were decreased every 210,000 blocks.

The Central Banks telling the public the average inflation rate is at 2% but could indicate higher than up to 10%.

The estimated inflation rate increase in 2020 is at 2.5% because of the bitcoin halving.

More Info here:
Reference:
https://news.bitcoin.com/bitcoin-halving-inflation-rate-central-banks/

Bitcoin is getting better than banks, that's a fact. Inflation rates between BTC and central banks have a significant difference

squatter

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STOP SNITCHIN'

Quote from: DooMAD on February 26, 2020, 02:07:17 PM

Quote from: squatter on February 26, 2020, 01:48:38 PM

The circulating supply is increasing as we speak due to the mining subsidy. Miners are creating about 1,800 bitcoins per day. Deflationary? I don't think so. Tongue

The argument that Bitcoin is deflationary only applies once users are losing bitcoins at a faster rate than inflation. You'd be hard pressed to find evidence that 3.6% of bitcoins are being lost annually.

Indeed. Over a long enough timeframe, Bitcoin can be considered deflationary, but not in the short term. To be fair, though, it is other of those things that Bitcoiners have generally struggled to agree on over the years, heh. Have a look at this stackexchange question from 6 years ago and the decidedly mixed answers given as an example: https://bitcoin.stackexchange.com/questions/19961/is-bitcoin-deflationary-and-inflationary-at-the-same-time

The quantum computing threat adds a new angle to this discussion too. If Bitcoin's signature scheme is broken, lost bitcoins (which weren't moved to quantum-safe addresses) could be stolen and reclaimed. Then the whole narrative that "4 million bitcoins have been lost forever" could get turned on its head.

DooMAD

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Quote from: squatter on February 26, 2020, 01:48:38 PM

Quote from: avikz on February 26, 2020, 01:28:15 PM

How can the inflation is even 3.6%? It is a deflationary currency! Can you please elaborate?

The circulating supply is increasing as we speak due to the mining subsidy. Miners are creating about 1,800 bitcoins per day. Deflationary? I don't think so. Tongue

The argument that Bitcoin is deflationary only applies once users are losing bitcoins at a faster rate than inflation. You'd be hard pressed to find evidence that 3.6% of bitcoins are being lost annually.

Indeed. Over a long enough timeframe, Bitcoin can be considered deflationary, but not in the short term. To be fair, though, it is other of those things that Bitcoiners have generally struggled to agree on over the years, heh. Have a look at this stackexchange question from 6 years ago and the decidedly mixed answers given as an example: https://bitcoin.stackexchange.com/questions/19961/is-bitcoin-deflationary-and-inflationary-at-the-same-time

zviadits

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Central banks lie, 2% is the wrong figure. Bitcoin is an excellent asset and the further it develops, the more profitable it becomes in different aspects. Bitcoin is a smart future

kryptqnick

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Quote from: squatter on February 26, 2020, 01:48:38 PM

Quote from: avikz on February 26, 2020, 01:28:15 PM

How do you calculate the inflation rate of bitcoin. It is a currency with limited supply and the the supply will decrease at certain interval. How can the inflation is even 3.6%? It is a deflationary currency! Can you please elaborate?

The circulating supply is increasing as we speak due to the mining subsidy. Miners are creating about 1,800 bitcoins per day. Deflationary? I don't think so. Tongue

The argument that Bitcoin is deflationary only applies once users are losing bitcoins at a faster rate than inflation. You'd be hard pressed to find evidence that 3.6% of bitcoins are being lost annually.

While people often say that Bitcoin is deflationary, it's true that since the circulating supply increases, there's some inflation rate. As for how it's calculated and whether it's calculated accurately - that's also a question for me. And speaking of deflation, I believe that it's true that Bitcoin is deflationary, from a long-term perspective. Even the fact that the Bitcoin inflation rate is decreasing inevitably is supporting this idea. And eventually, once the mining's over, Bitcoin will truly be a deflationary cryptocurrency.
Furthermore, if we interpret these terms judging by the prices of goods (inflation if it increases and deflation if it decreases) which is also a common way to define inflation and deflation, then Bitcoin has shown to be deflationary (since one pizza costs less and less in BTC).

Jet Cash

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They may not be lost permanently, but they are being moved into long term investment holding accounts.

squatter

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Quote from: avikz on February 26, 2020, 01:28:15 PM

How do you calculate the inflation rate of bitcoin. It is a currency with limited supply and the the supply will decrease at certain interval. How can the inflation is even 3.6%? It is a deflationary currency! Can you please elaborate?

The circulating supply is increasing as we speak due to the mining subsidy. Miners are creating about 1,800 bitcoins per day. Deflationary? I don't think so. Tongue

The argument that Bitcoin is deflationary only applies once users are losing bitcoins at a faster rate than inflation. You'd be hard pressed to find evidence that 3.6% of bitcoins are being lost annually.

avikz

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Quote

As of now, the BTC’s inflation rate is around 3.6%

How do you calculate the inflation rate of bitcoin. It is a currency with limited supply and the the supply will decrease at certain interval. How can the inflation is even 3.6%? It is a deflationary currency! Can you please elaborate? I fail to understand how can a currency system with limited supply and controlled to decease at a certain interval, have even 1% of inflation!

The current methodology of calculating inflation (Change in price annually) doesn't really work for bitcoin because it is measured by Satoshi or small units which doesn't have a fixed price point! So if you use the current calculation method on bitcoin, it will show different inflation on dollar based value and EUR based value!

Destroyeroff98

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Perhaps Bitcoin and may reduce the rate of inflation in the country.
But this will affect the economy, since it will be very difficult to tax Bitcoins. And for the country's taxes are needed.

Asuspawer09

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As Satoshi Created the Bitcoin and designed a protocol to be an inflationary currency as the value of bitcoin is volatile. Also as bitcoin’s inflation always decreases every four years because of this bitcoin halving. As of now, the BTC’s inflation rate is around 3.6% and we are expecting it to drop to 1.8% after the bitcoin halving event. Comparing it to the average central banks, the cryptocurrency has a lower inflation rate.

“When someone tries to buy all the world’s supply of a scarce asset, the more they buy the higher the price goes.”

As the supply of bitcoin is limited, the rewards of the miners were decreased every 210,000 blocks.

The Central Banks telling the public the average inflation rate is at 2% but could indicate higher than up to 10%.

The estimated inflation rate increase in 2020 is at 2.5% because of the bitcoin halving.

More Info here:
Reference:
https://news.bitcoin.com/bitcoin-halving-inflation-rate-central-banks/

Topic: Bitcoin Halving Could drop Inflation Rate lower than central banks (Read 252 times)