When you do something that increase the value of your currency, it directly influence the buying power of that currency. So with inflation your
currency lose some buying power and you can buy less goods for the same amount of currency that you had before it went down. The Halving is
supposed to increase scarcity of available coins and when something is scares, it normally goes up in value. (If the demand stays the same)
There are many factors influencing the impact of the Halving, but in most instances the price goes slightly upward after a Halving occurred.
Topic: Does halving really create deflation? - page 6. (Read 1214 times)
Halving is litelrally the ONLY factor influencing the supply of bitcoin.
LOL, chill mate 
We know that inflation != money supply growth, that is enough... No need to get agitated for public misconception. Just chill and remind the public occasionally, so that we don't get a heart attack.
By the way, lost BTC also affects the BTC total supply, but might be not that significant since Satoshi said it could be considered as a bonus.
Quote
Lost coins only make everyone else's coins worth slightly more. Think of it as a donation to everyone.
Source: https://bitcointalksearch.org/topic/m.1647 
To my opinion this is also another theory that isn't proved. The only thing that really influence the price is supply and demand ratio and everything else are side effects.
Halving might have certain effect but that is usualy not significant and long lasting.
Halving might have certain effect but that is usualy not significant and long lasting.
If you are looking at the price of the bitcoin, we are now experience a crisis that we called deflation that the cost of the coin is decreasing. It affects the market; there are a lot of reasons why it touches on the market. According to those theories, because of the persons who have the most substantial amount of the bitcoin, they are holding their coins that affect the supply and demand we called them "whales." In the previous year, the bitcoin is coming from the lower value, then decreasing every time. This process usually is part of the cryptocurrency.
To my opinion this is also another theory that isn't proved. The only thing that really influence the price is supply and demand ratio and everything else are side effects.
Halving might have certain effect but that is usualy not significant and long lasting.
Halving is litelrally the ONLY factor influencing the supply of bitcoin.Halving might have certain effect but that is usualy not significant and long lasting.
To my opinion this is also another theory that isn't proved. The only thing that really influence the price is supply and demand ratio and everything else are side effects.
Halving might have certain effect but that is usualy not significant and long lasting.
Halving might have certain effect but that is usualy not significant and long lasting.
This is what I meant in my above post:
Read:
Well, actually money growth in US is around 6% and rising, never have been below 2% in the last 30 years (except a single read).
Inflation in US is about 2%, in the same ballpark of many other economies.
The halving means less inflation. There's deffo no deflation on the cards.
Read: This one will be a biggie because the inflation will fall below 2% which is often the figure of a decently managed normal economy.
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This one will be a biggie because the inflation money supply growth will fall below 2% which is often the figure of a decently managed normal economy.
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Well, actually money growth in US is around 6% and rising, never have been below 2% in the last 30 years (except a single read).
Inflation in US is about 2%, in the same ballpark of many other economies.
Compared to the traditional economy when printing cash, immediate inflation is generated, bitcoin represents a deflationary economy when placed in direct contrast to this scenario and is able to combat inflation, see the case of Venezuela, Argentina, Chile.
When Bitcoin halving occurs, just by pure logic, the value should increase, it may not happen instantly because the market even if it is fast can take, but in the long term it will be seen that that will be the behavior, only the fact that it has a limited supply is an imperative reason for it to be valued, if the cash were of limited naturalization it would never lose value, Bitcoin may fall in price, but not its value, it is not the same price as the value.
When Bitcoin halving occurs, just by pure logic, the value should increase, it may not happen instantly because the market even if it is fast can take, but in the long term it will be seen that that will be the behavior, only the fact that it has a limited supply is an imperative reason for it to be valued, if the cash were of limited naturalization it would never lose value, Bitcoin may fall in price, but not its value, it is not the same price as the value.
Deflation is not caused by halving (I mean maybe it is but that is not the topic) deflation is created because in reality bitcoin gets higher in value since there is less of it all the time.
There are always some people who send bitcoin to some unknown wallet or somewhere wrong and it is gone forever, people always say the max bitcoin there will be is 21 million but there must be at least a million bitcoin that is gone already to places that is no longer in use, sure if those people ever comeback they will be able to use it but more often than not there are not that many people that come back to it. So long story short deflation does exist but it is not because halving, halving only excels it and that's it, there is a deflation because instead of printing dollars like deal, we lose bitcoins instead.
There are always some people who send bitcoin to some unknown wallet or somewhere wrong and it is gone forever, people always say the max bitcoin there will be is 21 million but there must be at least a million bitcoin that is gone already to places that is no longer in use, sure if those people ever comeback they will be able to use it but more often than not there are not that many people that come back to it. So long story short deflation does exist but it is not because halving, halving only excels it and that's it, there is a deflation because instead of printing dollars like deal, we lose bitcoins instead.
Maybe we will know it later after halving when miners are going to have to seek profit versus the amount of energy they spent getting only 6.5BTC. Prices will appreciate through how much the sellers are going to bid while scarcity of supply kicks. I'm still wondering despite how much crypto news were spread all over social media sites, the demands are not increasing. We are all waiting for that deflation to happen, and I guess right now there are more manipulators who keeps preventing it yet to happen.
Thanks for defining it clearly. But still it is surprising to see the prices going down so steeply, with the next block reward halving only a few months away. The user base is increasing at a good pace, and with inflation at such low levels, ideally we should be witnessing a sharp jump in the exchange rates. But quite the opposite is happening right now.
It only counts when there's demand. If there's little to no demand then nothing and no one can influence the price in a positive and decisive direction. When demand is really crap then any inflation at all is going to hurt the price. The coins keep on coming with fewer people willing to pay for them.
The halving means less inflation. There's deffo no deflation on the cards.
This one will be a biggie because the inflation will fall below 2% which is often the figure of a decently managed normal economy.
When you think of the absolute tidal wave of new coins that were arriving yet still the price had some powerful rises and how much better and bigger the platforms are now it could make for a powerful scenario.
This one will be a biggie because the inflation will fall below 2% which is often the figure of a decently managed normal economy.
When you think of the absolute tidal wave of new coins that were arriving yet still the price had some powerful rises and how much better and bigger the platforms are now it could make for a powerful scenario.
Thanks for defining it clearly. But still it is surprising to see the prices going down so steeply, with the next block reward halving only a few months away. The user base is increasing at a good pace, and with inflation at such low levels, ideally we should be witnessing a sharp jump in the exchange rates. But quite the opposite is happening right now.
One of the important points by those who believe halving will increase the price alot is that the amount of bitcoins dumped by miners will reduce which will contribute to the increase in the price of Bitcoin.
My guess is that some will try to suppress any possible effect on the price by the halving. that is, if the community allows suppression to happen by then.
My guess is that some will try to suppress any possible effect on the price by the halving. that is, if the community allows suppression to happen by then.
The halving means less inflation. There's deffo no deflation on the cards.
This one will be a biggie because the inflation will fall below 2% which is often the figure of a decently managed normal economy.
When you think of the absolute tidal wave of new coins that were arriving yet still the price had some powerful rises and how much better and bigger the platforms are now it could make for a powerful scenario.
This one will be a biggie because the inflation will fall below 2% which is often the figure of a decently managed normal economy.
When you think of the absolute tidal wave of new coins that were arriving yet still the price had some powerful rises and how much better and bigger the platforms are now it could make for a powerful scenario.
So in your opinion, deflation will not happen now, but when the supply of bitcoin is fully mined and the demand is high, then deflation will occur?
It technically doesn't even rely on demand in my example, but demand is always a helping factor to keep coins *temporarily* out of circulation. but there is another theory that bitcoin is just a tool for sharks to manipulate. So if one day, people realized the value of bitcoin and no longer needed to buy it, would it become zero and disappear? so there will be no deflation then? right?
I do not believe in conspiracy theories. They're admittedly exciting to read, but don't take them too serious. Demand can drop, and it could perhaps drop significantly at some later point in the far future, but not to a point where Bitcoin's value nullifies entirely and everyone stops mining and running nodes. Bitcoin started out as a small network where coins weren't even officially tradable on exchanges as we know it today. People were just exchanging them between themselves through forums and whatnot. I'm pretty confident that in the worst case scenario for Bitcoin it will be used in a similar fashion. Perhaps not interesting as investment, but very interesting from a use perspective.
When I read this kind of question, or even read some articles on crypto's I always feel there's a big misunderstanding about the term "inflation".
In layman terms, the term inflation refers to purchasing power of a currency. Inflation actually measures the rate at which the price level moves over a given time horizon. If prices go up, then we say there’s inflation, if prices goes down, we say there is a deflation.
On a side note, it very difficult to measure all the prices in an economy, so the inflation measure observe a subset of prices, the price of a given basket of goods: the composition of such basket greatly influences the outcome of the inflation measure.
In the recent years, in the US and much more in the EU we have observed a decreasing inflation: prices have always been increasing but at a much lower pace. Every CB has a target of inflation, as a sole or conjunct target of around 2%. So broadly speaking we can think at this of a current level of inflation, while back in the 80’s we observed levels above 10%.
This means that the fiat currencies lose value in real terms: if I have to pay 2% every year to buy the same liter of milk of loaf of bread this doesn’t mean milk or bread increased value, but we are using a devalued currency: it’s like measuring your height with a shorter and shorter meter, you aren’t getting higher, you are using a shorter unit of measure.
What causes inflation is a very complex matter, some indication have been written here on the thread, but I will analyses only one of those: “money supply”.
Let’s think about an economy with stable inflation at 0%: prices are still, and I have been able to buy my milk for 1$ since 10 years. Let’s think about the CB governor going nut ant printing more money: he decided to print 1 additional dollar for every dollar available: everyone eventually get his extra dollar: what do you think it happen to prices? Yes, the same old liter of milk now it’s sold for 2 dollars.
Money supply is then the most important figure to look at to look at when trying to figure out where inflation is coming from.
Now to bitcoin.
Bitcoin is a deflationist currency: contrary to fiat currencies who have lost most of their values over the years (a gallon of milk cost 1.65$, while today is 4$) it has always been appreciating in real terms, this means it has always (not always actually if we think at December 2017) gained value. Two large pizzas were sold for 10,000 BTC in 2010, but now they are sold for 0.004 BTC.
In this sense bitcoin is a currency that has exhibited a deflation, even if the money supply has always been positive, yet decreasing.
Bitcoin money supply is predetermined, and halves every 210,000 blocks, typically every 4 years. Bitcoin money growth is the moment around 3,70%, and it will be halved to 1,80% at the next halving event.
To recap: bitcoin is currency with a money supply growing at decreasing rate. The market forces driving his price have caused Bitcoin to exhibit a deflationist behavior.
Money supply is hard coded in the bitcoin protocol, while the deflationist property is only the result of the balance between supply and demand on the market.
Regarding the relationship between halvin/monetary supply/price relationship the best advicee i can give you is read my thread in signature about SF model:
Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
In layman terms, the term inflation refers to purchasing power of a currency. Inflation actually measures the rate at which the price level moves over a given time horizon. If prices go up, then we say there’s inflation, if prices goes down, we say there is a deflation.
On a side note, it very difficult to measure all the prices in an economy, so the inflation measure observe a subset of prices, the price of a given basket of goods: the composition of such basket greatly influences the outcome of the inflation measure.
In the recent years, in the US and much more in the EU we have observed a decreasing inflation: prices have always been increasing but at a much lower pace. Every CB has a target of inflation, as a sole or conjunct target of around 2%. So broadly speaking we can think at this of a current level of inflation, while back in the 80’s we observed levels above 10%.
This means that the fiat currencies lose value in real terms: if I have to pay 2% every year to buy the same liter of milk of loaf of bread this doesn’t mean milk or bread increased value, but we are using a devalued currency: it’s like measuring your height with a shorter and shorter meter, you aren’t getting higher, you are using a shorter unit of measure.
What causes inflation is a very complex matter, some indication have been written here on the thread, but I will analyses only one of those: “money supply”.
Let’s think about an economy with stable inflation at 0%: prices are still, and I have been able to buy my milk for 1$ since 10 years. Let’s think about the CB governor going nut ant printing more money: he decided to print 1 additional dollar for every dollar available: everyone eventually get his extra dollar: what do you think it happen to prices? Yes, the same old liter of milk now it’s sold for 2 dollars.
Money supply is then the most important figure to look at to look at when trying to figure out where inflation is coming from.
Now to bitcoin.
Bitcoin is a deflationist currency: contrary to fiat currencies who have lost most of their values over the years (a gallon of milk cost 1.65$, while today is 4$) it has always been appreciating in real terms, this means it has always (not always actually if we think at December 2017) gained value. Two large pizzas were sold for 10,000 BTC in 2010, but now they are sold for 0.004 BTC.
In this sense bitcoin is a currency that has exhibited a deflation, even if the money supply has always been positive, yet decreasing.
Bitcoin money supply is predetermined, and halves every 210,000 blocks, typically every 4 years. Bitcoin money growth is the moment around 3,70%, and it will be halved to 1,80% at the next halving event.
To recap: bitcoin is currency with a money supply growing at decreasing rate. The market forces driving his price have caused Bitcoin to exhibit a deflationist behavior.
Money supply is hard coded in the bitcoin protocol, while the deflationist property is only the result of the balance between supply and demand on the market.
Regarding the relationship between halvin/monetary supply/price relationship the best advicee i can give you is read my thread in signature about SF model:
Stock To Flow Model: Modeling Bitcoin's Value with Scarcity
As long as there is block inflation, it's exactly that, inflation. Only when the last one single satoshi has been minted, miners fully rely on transaction fees, then Bitcoin will start to be a deflationary currency. Why? Because people lose coins for 1001 different reasons. All the satoshis lost directly lower the number of circulating satoshis, and that happens year after year after year.
It's something we don't yet have to worry about because most of us won't live to tell what exactly is going to happen, and how the market will react to it.
So in your opinion, deflation will not happen now, but when the supply of bitcoin is fully mined and the demand is high, then deflation will occur?It's something we don't yet have to worry about because most of us won't live to tell what exactly is going to happen, and how the market will react to it.
but there is another theory that bitcoin is just a tool for sharks to manipulate. So if one day, people realized the value of bitcoin and no longer needed to buy it, would it become zero and disappear? so there will be no deflation then? right?
Inflation/deflation is the effect, not the cause, and it measured via the price of goods and services to a particular currency. For example, let's say BTC price for one McDonald's Big Mac is 0.001 BTC. If next year the price increase to 0.002 BTC, then it's called inflation, conversely if the price decrease to 0.0005 BTC, then it's called deflation.
Many things could cause this inflation/deflation, such as:
- increase/decrease in the money supply;
- technological advancement;
- force majeure, etc.
(read about cost-push and demand-pull)
So back to the OP question, "Does halving really create deflation?" Not always, the money supply is only one out of various other factors. Using my Big Mac example, it depends on the cow population, bread availability, your burger preference, etc.
Many things could cause this inflation/deflation, such as:
- increase/decrease in the money supply;
- technological advancement;
- force majeure, etc.
(read about cost-push and demand-pull)
So back to the OP question, "Does halving really create deflation?" Not always, the money supply is only one out of various other factors. Using my Big Mac example, it depends on the cow population, bread availability, your burger preference, etc.
hey guys, i'm quite serious on this topic because of the confusing people when talking about Bitcoin "deflation". As far as I understand, the deflation is that goods are cheaper than they are on time or because there is no need to buy goods or the supply of money gets lower.
So for Bitcoin, why is there a deflation? Although I know that miners will find it harder to mine bitcoins after every Halving event, the value of our goods stays the same and is based on fiat money. Bitcoin's price is still being manipulated and it is not necessarily a strong growth after halving. or the best example is Litecoin. after halving, its price is halved instead of rising higher.
So, the question is, does the Halving event actually cause deflation, or is it just some bullshit theory?
Ps: I highly appreciate the comments with sincere contributions. Thanks
Actually truth is yes it would such a thing. Deflation isn't merely a direction or prices going down. It actually is a phenomena where the aggregate demand in the economy for money is much higher than that of Aggregate supply of money in the economy. This means that money is required in the economy but it's not being created at a similar pace. This would lead to shortage of money and money hoarding among people who would then try to buy lesser things and store their money. Such a situation will make a economic crunch in the economy. So, in nutshell, halving will really create deflation as pace of new supply would be much lesser. So for Bitcoin, why is there a deflation? Although I know that miners will find it harder to mine bitcoins after every Halving event, the value of our goods stays the same and is based on fiat money. Bitcoin's price is still being manipulated and it is not necessarily a strong growth after halving. or the best example is Litecoin. after halving, its price is halved instead of rising higher.
So, the question is, does the Halving event actually cause deflation, or is it just some bullshit theory?
Ps: I highly appreciate the comments with sincere contributions. Thanks
Deflation is the opposite of inflation. Inflation is directed upward while deflation is downward. The fiat currency is deflating because it is losing value over time, while the prices of goods and services are inflating, and as a result the purchasing power of the fiat currency is getting weak over time. Bitcoin is inflating because its value is increasing over time, the exact opposite of fiat. The rewards of miners, however, are deflating due to halving which happens every 4 years.
No, deflation isn't just the opposite of inflation. It's when the price of goods and services go down, whilst inflation rates are 0 percent, it's not the correct definition for a currency that gains value, etc.I wouldn't classify it as deflation (the version you are referring to), since the supply is not being moved, but more and more bitcoin is getting injected in the economy. It's hard to describe what exactly is it, since it's not really a term that has been invented yet.
Halving creates scarcity and a limited supply is needed to prevent inflation. I wouldn't necessarily say it causes deflation because the markets are more complicated than that but at the least it ensures a limited supply forcing there to be demand.
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