Topic: [CHART] Bitcoin Inflation vs. Time - page 49. (Read 1073414 times)

It's not possible to determine the number of Bitcoin users, but a fairly good (I think) estimator, at least for relative comparisons, would be the number of Blockchain.info Wallet accounts since it's reasonable to expect the number of wallet accounts per human user to be almost exactly 1. (In other words, it would be rare for a human to have more than one Blockchain.info wallet account.)

Is it possible to determine the number of Bitcoin users?

It would be interesting to see the number of users, or perhaps number of in-use wallets, versus the money supply/inflation rate.

But you did.


I fully agree. However, I don't see anybody hiding the facts or sweeping them under a rug. I think that most bitcoin users know the bitcoin production rate exactly. It was Ƀ50 per block in the first four years. Now it is Ƀ25 for the next four years, then Ƀ12.5, and so on, asymptotically approaching the final total of Ƀ21 million. One block is generated, on average, every 10 minutes.

Show me a bitcoin user who does not know this. And then show me anybody who tries to sweep this fact under a rug. I have never heard of anybody trying that.

I didn't say anyone is being cheated. This is how Bitcoin differs from the fiat system. I'm also not arguing that Bitcoin should have been constructed in any other way. What I am saying is that Bitcoin is presently inflationary and that trying to hide this fact by pointing to the increasing value of bitcoins is dishonest. You cannot dismiss the inflation simply because the growth in demand is outpacing the growth in supply. The inflation deserves to be recognized and understood for what it is, not swept under the rug.

I cannot follow that argument, for more than one reason. I will mention only one here: The money supply inflation of bitcoin is known precisely in advance, therefore everybody knows exactly what to expect, and therefore nobody is being cheated.

I wouldn't discount the possibility that this entire class of "bit-mixing" message digests may be broken some day. A brute-force search will not need to search a 256-bit key space. Successive breaks of the cryptography may significantly narrow that search space. Besides, you don't even have to search the whole 256-bit key space. There are numerous private keys that all produce the same Bitcoin address, and you only need to find one of them to claim the funds at that address.

I didn't say anything about quantum computing. Indeed, SHA has not yet been shown to be vulnerable, nor has ECDSA. I don't make the mistake of assuming that they are not vulnerable, however.

You are mistaken.

It might be possible that weaknesses/flaws are eventually found in SHA256, ECDSA, and RIPEMD-160 which would break the cryptography used by bitcoin, but without discovering flaws it will never be possible to brute-force a private key until computers are no longer made of matter, and no longer use energy to operate.

As far as I know, the SHA256 algorithm is not vulnerable to quantum computing, but I suppose that if someone happened to reuse an address and then lost the coins so that their public key is known, in that special situation if quantum computing ever reaches significant enough abilities, it might be able to crack a private key. But we are talking about an analogy closer to gold that has been pushed below the crust of the earth at a tectonic subduction zone than sitting on the bottom of the ocean.

I must beg to differ. Prices (of goods) may be holding steady or even going down, and yet inflation may still be cheating people out of purchasing power. Inflation is never good (except for debtors), even if prices are falling. Inflation means prices are not falling as quickly as they would be if inflation were not present, meaning your purchasing power is still being stolen. In the case of Bitcoin, we know the inflation well in advance, and we all agree to it when we get into Bitcoin, so it's not insidious or evil like the inflation perpetrated by the central banks, but it is still significant and not negligible.

Even "lost" coins are not truly lost. They're more like gold that has sunk to the bottom of the ocean. It will be expensive to get them back, but it's not impossible. And the technology to do it will get cheaper over time. Eventually a device that fits in your pocket will be able to brute-force a private key to reclaim the "lost" bitcoins. The people actively using Bitcoin will have long since moved on to stronger cryptography.

Doesn't matter much. Bitcoin is already deflationary in the sense that their price is rising.

The reason is that, while the money supply inflates, demand inflates even more. There is inflation, but there is no effective inflation. The price behaves deflationary, unlike that of the dollar or the euro, which is truly inflationary.

True, but since that is approximately 127 years away, can we assume that the bitcoin supply will be inflationary for the entire lifetime of anyone alive today?

I suppose it depends on whether you count "lost coins" as a reduction in supply against the generation of new coins, and how high the rate of lost coins is in any given year.

Eventually that little line on your graph will level out. Once all BTC are mined and in the hands of bearers, inflation will be impossible because the amount of BTC is FINITE!

I think this shouldn't be lost so I set it as sticky.

Great reference charts and contribution to the forum...Thanks!

+1 impressive

Useful graphs, props.

Very cool, thanks.

Nice.

I think it would be useful a more detailed chart, from the beginning until 2014

The money supply increases linearly (roughly) at 50 BTC every 10 minutes for the first 210000 blocks, then 25 BTC every 10 minutes for the next 210000 blocks, then 12.5 BTC every 10 minutes, and so on.  That is why the blue line is made up of straight lines with decreasing slope every 4 years or so.

The instantaneous inflation rate decreases over time.  If I have 50 BTC in the total economy (block 1), and then I suddenly have an additional 50 BTC 10 minutes later, the total supply has inflated 100% from what it was a moment ago.  Annualized that works out to well over 1000% inflation rate.  As the total supply increases after each block, the next 50 BTC are smaller percentage of the total then the previous 50 BTC were (because the total is larger). Now that I have 100 BTC in the supply, the third block of 50 BTC increases the total supply only 50% instead of 100%.  This is why the red line is made up of curved sections (although given the scale of this graph after 2017 it becomes difficult to see the curve).

Then once every 210000 blocks the amount of newly minted currency is cut in half.  This creates a 1 time sudden drop in the amount of currency being created every ten minutes.  This would be why you see the straight dropping verticle portion of the red line every 4 years or so.

It's a percentage. It could be calculated and plotted in discrete yearly steps, but this chart shows the instantaneous (i.e., continuous) rate of inflation. "Annualized" just means that the rates are expressed at each point on the curve as though that rate of inflation were constant for a whole year and the money supply at the end of that year were compared to that at the beginning of the year. Inflation is usually expressed as an annualized rate. When you hear that the Federal Reserve is targeting an inflation rate of 2%, that's an annualized rate.