Topic: new cryptocurrencies cause inflation? (Read 924 times)

not worried about the near future

just thinking about how things would play out in the long run, I guess the natural selection (competition), will take care of which coin survives, most popular coin(s) wins, (lets hope it will also be technically the best)       

I guess the one of the main problems new coins have is network strength, when they are released. So just creating a clone with additional 21M coins will not really help when the network of the new coin is very little, the coins will be worthless, the interest will grow and strength of the network will grow hand in hand, and value.

 I think I'm also not worried (anymore) about this in the long run, after having thought about it for some longer

 

People have told me that they don't think cryptocurrency should have value because bitcoin can be cloned and forked so easily. Doesn't that mean the money supply is basically unlimited? This is a misunderstanding of cryptocurrency's market. Yes you can clone bitcoin but you have to compete in the market for it to gain value. We already see that it's not so trivial to carve 1% of bitcoin's market cap by simply forking it, as litecoin is the only one which managed this feat so far. So just because someone can fork and print another 21M coins doesn't mean bitcoin would automatically lose half of its value. We must keep in mind, the nature of this 'fork inflation' is vastly different from the printing of fiat. Forks must compete in the market to gain recognition while fiat printing is decreed into existence and given the same value of existing money stock.

That said, it's completely reasonable to argue that some altcoins would eventually rise to challenge bitcoin, so it indeed would threaten the 'deflationary' nature of bitcoin. But the good news to bitcoiner is that, bitcoin still has heavy advantage in recognition so the weakening of its 'deflation' is very minor, not to mention the combined cryptocurrency market is still in high growth period so there is really nothing to worry about in the near future.

Bitcoin's monetary supply is increasing. The price trend on most scales is quite deflationary.


It is, as the OP has surmised and I agree with, one of bitcoin's silliest shortcomings. Pandora is out of the box, and there will not be one cryptocurrency to rule them all in a deflationary system, because people will just use or create others when bitcoin is annoying. Alternatively, if you drop the pyramid distribution scheme, there is no longer an incentive to leave the currency for one that is less one-sided. An example if this is proposed here.

When taken at different scales and time intervals, bitcoin will always have big periods of price inflation and big periods of price deflation because a fixed money supply is easily manipulated. Because of the properties of other cryptocurrencies follow the same scheme, bitcoin is ultimately relegated to being one of many. New, deflationary currencies are likely to be "the cure" for manipulation. Instead, if the money supply were unbound in the first place, everyone could stick around and live in utopia.

Bitcoin is currently inflating, no? New bitcoins are produced, therefore it's inflating. Once the hard cap is reached, it will stagnate.

As for the alt coins creating inflation being same to fiat money printing: the difference is that the new alt coins are separate moneys. An alt chain doesn't print new bitcoins, but new feathercoins or ppcoins. So it's not the same at all. If the Fed started printing another money, like Monopoly money, would that lower the price of dollars?

I was wondering how this works, bitcoin is based on the fact that it is deflational, and so are most other cryptocurrencies (I don't know exactly all details about all of them), but since there are coming more altcoins every couple of weeks, isn't that pretty much the same as inflation (printing money)?  I'm not against altcoins, I'm just wondering what other people think about this.