The price managed to be steady in the face of inflation.
If prices are remaining steady then there is no inflation.
In the case of bitcoins, there will have to be high deflation if bitcoins are widely adopted.
The rate at which bitcoins are generated is fixed over the long term. If you increase the demand for bitcoins at a rate faster than they are being generated, then they will become more valuable compared to other currencies. That is deflation. We have seen deflation in the bitcoin and we will continue to see deflation if bitcoins are successful. If people do not value and demand bitcoins, then you will see inflation.
Two different forms of inflation. You are talking about price inflation. He was talking about supply inflation. The supply certainly did inflate. The fact that price did not (at least relative to dollars, which had a fairly small amount of inflation in the period mentioned) means that the bitcoin economy is growing in pace with the supply.
No. GoldRush is correct, but is expressing it in a confusing manner. Inflation is when the monetary base increases
relative to the economic activity that the currency represents. So the steady increase in the Bitcoin price, as measured in US$, represents either the decrease of the Bitcoin base
relative to the economic activity Bitcoin represents (which could be an increase in the demand for bitcoins due to a growing user base or a decrease in the monetary base with a static economy, we can assume it's the former) or inflation of the US $, or both.
It's probably both. Considering the rate that the Bitcoin monetary base is currently increasing, it seems improbable that increases the Bitcoin economic activity explain the rising price, and whatever rate that US$ may be inflating, it's not that high.
