Topic: Fixed supply vs reducing supply (Read 200 times)

Reducing the supply or adding more BTC today will just make it a disaster for all of us in crypto because it will suddenly change the view when it comes to decentralization.

Fix supply will be best. Millions of BTC already are lost forever with no chance of recovery, this concept alone made it rare that prices are affected due to demand. the opposite will happen when we add more BTC or worse ruin the trust.

Reducing supply may be a good idea but we all know that this is not enough for coin to be valuabe

You are comparing bitcoin with altcoins but without doing a full comparison. The reason why it is not and will never happen in bitcoin is a simple word: lack of pre-mine in bitcoin.

You see those altcoins that are "burning their supply" are doing it because one person (the one who created the shitcoin) had premined a large amount of it and owns it for free. This is not true about bitcoin, bitcoin didn't have any kind of premine, shadowmine,... From block 1 every block was mined fair and with the same technology that was available to everyone.

Apart from what, burning supply means the developer had no idea what to set the supply limits to so they have to change it now. Of course most of the time this is just a desperate attempt to "hype" and try to pump their shitcoin.

the scarcityof.supply will actually weigh.ahoarding, maybe if an investor does this then there will be a lotofscarcity.that will occur.and the ssupplywill.experience a scarcity.maybe the price will have little effecton.the stockmarket.while if the supplys.constant this will stabilize.prices in the market We hope that this investment will run as stable.as it used to be

The ideal currency has a constant value. So how can creating or burning coins achieve this goal?

The factors that affect the value of a currency are the supply, the velocity, and the economy. The value of a coin will remain constant if you burn coins when the velocity is increasing or the economy is decreasing. Likewise, the value of a coin will remain constant if you create coins when the velocity is decreasing or the economy is increasing.

In reality, maintaining a constant value is impossible to achieve because the velocity and economy are too difficult to measure or control.

If you can't control the value of a currency, a secondary goal then might be to reduce economic uncertainty. One way reduce uncertainty is to eliminate the variability of the supply. Such as,

• Assume that the economy will always grow and create coins forever on a fixed schedule.
• Assume that the economy will always shrink and burn coins forever on a fixed schedule.
• Make no assumptions and maintain the supply at a fixed number.

Assuming the economy will shrink forever is a bad assumption. That is why coins are not (or should not be) burned.

Assuming that the economy will increase forever is reasonable, even though that is not what really happens, so creating coins according to a fixed schedule is not bad. The difficulty, however, is to pick the appropriate creation rate. Too high, and you have inflation. Too low, and you have deflation. Picking the correct rate is not possible so the best choice is too pick a rate that is probably low in order to avoid risks (including hyperinflation).

Bitcoin make no assumptions and maintains the supply at a fixed number. While this may result in an increasing value due to lost coins and an increasing economy, it eliminates all uncertainty about the supply.

People are losing their Bitcoins all the time, and stats are showing that so far few millions of BTC are lost forever so we can say that total supply is reducing in reality.
Circulating supply for Bitcoin is growing but it can't be compared with other coins that are changing protocols all the time to create something they call ''better bitcoin'' with reducing supply and burning of coins.
People are more attracted to original idea of Bitcoin as scarce digital alternative to gold and payment system.

I want to make this simple, Bitcoin now has been reduced the supply due to the forever lost Bitcoin from the lost private key and the address that unrecoverable.  Experts say, its 20% has been already reduced and it was reduced to the total circulating supply, instead of 21 million Bitcoin it's now approximately more or less 18.7 million based on the CMC record.  This might increase the lost Bitcoin each year and possibly, it will keep reducing the circulating supply.

So, logically, Bitcoin becomes more expensive when the supply becomes less and that's I think the great advantage of Bitcoin when it will keep reducing the price plus another factor of the ongoing mass adoption.

The rate of supply increase is decreasing. By logic, this achieves a deflationary currency due to the purchasing power increasing with a lower rate of supply increase. Having a fixed supply with gradual decrease ensures a fairer distribution rather than constant rate of distribution and does nothing against padding the shock received by the miners as one day the block rewards has to be close to 0.

It doesn't affect security, or at least to any significant extent but several cryptos do adopt a tail emission which ensures stability of the network as well. As compared to the direct deflationary concept of Bitcoin, that involves far more modelling of economic conditions.

Yes, there are  advantages in reducing the supply of bitcoin and it was already stated by satoshi himself/herself saying that the less bitcoin there is, the prices will permanently go up, just basic supply and demand. Burn addresses are used to reduce the supply of bitcoin. Regarding disadvantage, it's still the same, supply and demand, if there's an abundance the prices isn't going to be that high.

The obvious answer is yes because in theory a reduction in supply would cause a "supply shock" after a period of time, and even if demand was to stay the same as it is today, the price would increase sharply (ala supply/demand ratio). The bitcoin ecosystem already burns coins through lost keys, deaths, etc. So there is no need for further coin burning mechanisms.

Currently, Bitcoin has a supply of 18,743,875.00 BTC, including the “gone for good” bitcoins, and it will reach 20,999,999.9769 BTC in block 7,140,000. You can call it fixed, but it is inflating with new coins everyday.

Advantages for who? For those who burn or for the rest of the Bitcoin users? Well, the Bitcoin users surely are benefitted since they have a commodity which is now scarcer. The people who burn them have their own purpose; usually they do it to earn some tokens. Probably many of them regretted for burning hundreds of bitcoins in the past.

Implement what exactly?

Yes, the first one that comes in my mind is that it makes you poorer, because your money aren't worth the same they were before the increase. Note that this can be an advantage too; if you knew that your money won't worth the same in the future, you would spend it and thus, you'd keep the economy healthy.

Obviously the permanent increase of the prices is the only advantage of burning the supply, remember that when the supply is low and the demand is steadily going up, the price of the product experiencing artificial scarcity is definitely going to go up.

               The supply of bitcoin is already too low for its demand. I really do not think that this will be good rather, I think it would be bad for bitcoin since it wouldn't be able to circulate more because instead of using it as a means of payment more often to contribute in worldwide adoption, people would just be hoarding bitcoins and the ones who would be in greater advantage are the whales that can keep on accumulating. Which can make it easier for them to manipulate market conditions which does not only affect bitcoin but also most of the altcoins.

There main goal for having huge chunk of supply is too boost the marketcap valuation of there project, The higher the marketcap means the higher exposure you will get which is very crucial on crypto market due to tough competition. Satoshi era is far different on the current market condition since Satoshi start it all while new project existing are just a copy or just another version of an existing project that's why the common goal is to climb up into the ladder rank.

Burning is unnecessary if teams, founders have clear math on what they want with the total supply they set for their coins. Satoshi does and he explains why he decided to give the total supply at 21 M for Bitcoin with M1 money supply. He also explains why he create the satoshi unit for Bitcoin, not smaller.

Altcoin projects are created for non sense reasons and their developers try to set as high total supply as possible with hope to get rich and become billionaires from billions or hundreds of millions coin they have. Later when they realize their initial plan is failed, they burn part of total supply with intention to cause a feeling of scarcity for their coin

Why is Bitcoin’s supply limit set to 21 million?

Well answered, makes sense to me now.

If reducing supply over time via burning would have been done from start it would have been a feature. If it would be done now, it would be called stealing from people's wallets.
However, it's not needed to be implemented. There are plenty of Bitcoin lost beyond recovery and the number will increase over time. People do lose wallets, people do send to wallets they think they have, but they don't... some even send willingly to known burn addresses. In the same way as any currency, bitcoins are lost, so you don't have to worry about implementing that.
I know, however, of at least one altcoin (actually token) that "withdraws" money from your wallet just because you have. It confuses a lot of people.

More lost bitcoins make it more scarce, hence more valuable.

On the other hand, increasing supply means diluting the value of the existing coins. And again, since it was not planned from start, it would not be OK to be done now. There are various altcoins playing with infinite supply (Dogecoin, Monero), and I think that finding a good enough value for the tail inflation is extremely difficult. I think that such value should be minimal.

Bitcoin currently has fixed supply of 21m coins. Are there any advantages to having a reducing supply over time via burning.

If yes, why hasn't this been implemented yet?

If no, the follow up question is: are there any disadvantages to an increasing supply?