Bitcoin is based upon Austrian Economic Theory, and there is no more 'sound' basis for a currency. If you want to start a perpetually inflating version, go right ahead, but it's already been done several times, and every time it has faded away in mere months. Bitcoin was designed to mimic gold, and it does this very well.
Clearly you haven't understood much of what I've said in this thread. I'm not talking about anything related to infinite inflation. Let me repost some things I've said in this thread and the other thread about a design contract so that you can see what I'm describing is CLOSER to gold and MORE aligned with the Austrian mind set.
If 500 tons of gold were lost at the bottom of the ocean for many years and the loss of this gold therefore gets factored into the gold price, I think that gold would be a better currency if the lost gold is never found because the price would then be more stable.
No the price would not be more stable. It would shift in one direction constantly for as long as we used it. But we don't live in some irrational world where lost gold can never be found again, so the opposite thing also applies; when gold is found the market adjusts and factors that into the gold price. In a world where all the gold has been mined, we would only have some gold being lost and some gold being found. Overall, this would result in the value of gold remaining at a stable pace, and not shifting infinitely in any one direction. The main factor applying a change to the value of gold will be natural market forces such as supply and demand in accordance with natural economic growth. It doesn't take a genius to see that this economic model is by far superior to a model which shifts infinitely in one direction, whether that direction is inflation or deflation. Both options taken to infinite extremes are not economically sound.
This is a sarcastic remark which helps illustrate my point further:
I could argue infinite inflation really isn't bad... you know it just benefits a few people, but in reality the market will always adjust even if we have a quadrillion trillion trillion dollars in circulation. No problem folks, that's entirely economically healthy and I see no reason why we should try to avoid that if the system can still work with that much money in circulation.
And this was my first analogy using gold:
To further illustrate the point I'm trying to make here, let me draw a comparison to gold, as people often like to compare bitcoin to gold in the way they function.
Gold can be lost, but not in the same way bitcoins are lost. When a person loses some gold, it doesn't just vanish into to thin air with virtually no chance of ever being recovered again, in the way bitcoins are lost. It will be some where waiting for someone to find it again at some point, even if they have to mine it out of the ground again. Would any of you really like a world where gold could vanish into thin air, and the supply of gold would slowly get smaller and smaller? Well of course some of you probably would judging by this thread so far.
But my point is that's not a healthy economic system, anymore than infinite inflation is a healthy economic system. Both are fundamentally flawed at a very basic level. Like gold, we need some system which will allow us to rediscover the lost bitcoins and bring them back into the system. The idea of a limited supply is great and fantastic, but it's not just a limited supply, it's an ever decreasing limited supply. It's easy to see that a stable money supply is by far the most superior currency structure, and bitcoin should be designed in the most superior way.
