Topic: What about the idea of an inflationary bitcoin? (Read 3183 times)

same as other types of currency, cryptocurrency also must have a value of inflation, inflation occurs when bitcoin compared with other currencies, inflation also depends on market demand, if the market demand for many bitcoin then inflation will go down, and vice versa when demand is low, inflation will rise ... 

You didn't get it. It can only have effect if some actors does not understand it, or nobody knows because it is unknown in advance.

Anyway, there are effects of inflation, but they are always bad. The one thing that the inflationists never think about (or talk about), is cementing the capital structure, making everybody poorer.

This is a major misconception that the MSM tends to point out for some reason. Yes bitcoin will become deflationary after well over a hundred years, however it is inflationary today. I do not understand why they make this mistake.

Inflation has a positive impact and negative effects, depending on whether or not severe inflation. If inflation was mild, it has a positive effect in terms of stimulating the economy could be better, ie increases the national income and get people excited to work, saving and investment holding.

Conversely, in a period of severe inflation, which in the event of uncontrolled inflation (hyperinflation), the state of the economy became chaotic and felt sluggish economy. People are not excited about working, saving, or investments and production because prices are rising rapidly. The fixed-income recipients such as civil servants or private employees and workers will also be overwhelmed bear and offset the price so that their lives become increasingly slipped and fell from time to time.

The MSM needs to dumb down concepts to a 9th grade or so level. As a result a lot of what the say about highly technical topics can be inaccurate.

We can generalize that statement as "Demand for Bitcoin exceeds/exceeded supply of newly mined Bitcoins, it can/could be considered as deflationary".

Technically it's not, but it all comes down to demand and supply, which one is greater at a given moment of time. Price stablity means they are about equal.

With Overstock, Newegg, Tigerdirect coming on board there is more engagement in trading bitcoins for goods and services, which adds to the circulating supply of Bitcoins on the market.

The MSM says that bitcoin is deflationary because the people who hold bitcoin generally believe that the value will rise over time, preventing them from wanting to engage in trades for goods/services for their bitcoin

Yeah, a lot of myths and misconceptions are touted around. People believe what they like to believe, but reality sets in, sooner or later.

Not exactly, and your 6% figure is much too high.

The amount of new coins mined per day via the block subsidy is fixed 3,600 BTC per day, however the total amount of coins in circulation will increase every day, so the inflation rate, as a percentage will shrink as the number of new coins, as a percentage of total coins decreases. The inflation rate will also drop by 50% every time the block subsidy is halved.

Well there's definitely lots of coins being mined everyday and thus the supply is inflating. I'm not really sure where the 'deflationary' label came from exactly. It will be deflationary in 2140 or whatever when blocks stop giving rewards. If it's ever around by then.

I read somewhere thatbitcoin inflates at 6% until all coins are mined.   Don't know if its correct

Bitcoin would be considered to be inflationary as more bitcoin are created every day.

Was it sarcasm (about how stable bitcoin price is)?

Price is determined by both supply and demand. So the number of newly minted (mined) coins that go into bitcoin market does necessarily influence its exchange rate. The main question here is what part of the created bitcoins changes hands on bitcoin exchanges. There was a thread somewhere around here where the OP tried to statistically estimate this share and how price is affected by new bitcoins.

True doge has a really large minting so it doesn't help it in that sense
But your right more or less the jury is still out on that

I would rather say that up to the present moment, bitcoin is neither deflationary nor inflationary (if we don't take price swings as a criterion for telling between them). In practice, now it behaves more like a purely speculative tool (which it is, at least presently).

The amount of bitcoins created does affect the price, it is that there is demand for the additional coins that are created.

This is called dogecoin.  So far the jury is still out.  However, I like bitcoin's deflationary aspect.

Yeah, and no matter the amount of bitcoins created everyday, it doesnt affect the price, there you can know how stable bitcoin price is.

It's already inflationary
Controlled supply until 2100 + so you don't really need to worry about it being deflationary in our lifetime

But Danny has a point it depends how people will perceive a decreasing Bitcoin supply

Bitcoin is technically inflationary while the block subsidies are still in place. However it will often act in a deflationary way as holders of bitcoin generally expect it's value to rise in the future.

At first it was clear that under inflation you meant here money supply, then you mentioned "a solid stable economic number to promote responsible spending", and this obviously referred to price inflation. You shouldn't mix these two notions since they are neither synonymous nor interchangeable. You may have a positive money supply (more money entering circulation) while the currency may still be appreciating and vice versa.

Many coins will be lost forever by people dying without finding the keys, or simply losing the keys (Karpeles?).
I'd imagine a very slow and controlled inflation once we hit the wall of 21 million.

No. What you refer to is the price of Bitcoin going up, because fiat is inflationary and people buy more goods and services trying to get rid of inflationary fiat, thus fiat inflation is reflected in the price of goods and services, including Bitcoin. But Bitcoin itself functions as money, the inflation of Bitcoin as money is being discussed here.

The value increasing 1% a month is same as adding the money supply 1% a month.

This is true bitcoin is very inflationary
For a few more halvings at least
https://en.bitcoin.it/wiki/Controlled_supply

Bitcoin will be a heck of inflationary for the next 5 years as is.

it's interesting that many people think short-term (what the price in fiat USD will be next month, next year at most), but at the same time look many years ahead to a far-away cap of 21 million, forgetting that Bitcoin has a double-digit yearly inflation right now and will continue to have it for the next 5 years. The brain conveniently suggests ideas to believe that they can be most comfortable with.

Even though most are scam coins, if they have money in them, they are worth mining and selling.

It isn't just about the code as the coin may get instamined as i've heard about darkcoin for example.

I think these days people are pretty meticulous when their analysing the code base to find any little surprises like that the dev might have left in. Although it definitely happens. Even the exchanges themselves are looking over the codebase before listing coins these days.

I agree that few of them really look promising, but you never know what may happen and after reaching nice price dev gets his hidden wallet out and dumps milions worth of coins...and ta-daaa game over.

Why would you want a coin that loses purchasing power over time.
Surely a deflationary coin, like Bitcoin is best because it increases in purchasing power over time.

Sure there are tons and tons of bad coins and scam coins, but the ones that have worth a lot are worth a lot precisely because the devs aren't just trying to get rich fast and dump them.

By my opinion 98% of their value is fake as they have no real value or purpose sadly, developers are only trying get-rich-fast scheme or some scam ones.

Some of them seem pretty valuable and successful so far. Just from looking at their market caps anyway. I don't own any altcoins at the moment.

Trend =/= value and success in any way. It's just an popular experiment.

There are altcoins that are Proof of Stake which give interest on held coins that is similar to inflation. 2-3% per year given in stake forging rewards. That seems to be a big trend in the altcoin market.

Thats similar to Milton Friedmans idea.  He wanted a computer to set the inflation at a constant 3%

Isn't this even simpler:

Year 1 - 21,000,000 + 0 (0%) = 21,000,000BTC
Year 2 - 21,000,000 + 0 (0%) = 21,000,000BTC
Year 3 - 21,000,000 + 0 (0%) = 21,000,000BTC

Why would it be difficult to calculate...

Year 1 - 21,000,000 + 210,000 (1%) = 21,210,000BTC
Year 2 - 21,210,000 + 212,100 (1%) = 21,422,100BTC
Year 3 - 21,422,100 + 214,221 (1%) = 21,636,321BTC

And I just did that brilliant math without a calculator

If the inflation is mathematically defined, it will only make it more difficult to calculate. There is no point in it.

the miners are the ones that process all the transactions right? If there are no miners, then nobody is processing bitcoin transactions...thats what I mean't by securing the network...

And I am going to guess you are going to say that bitcoins are valuable because there are a finite amount of them? Does that change if there is a certain amount released every year that is a specific controlled amount every year? Is bitcoin not valuable to you now? Because that is exactly what is happening right now....bitcoin releases a certain amount every year to be mined...Does the 21mil amount really matter to you when that number takes effect 125yrs from now?

I think you should think first about why bitcoin is valuable. (Hint: It's not because bitcoin is being managed like fiat by central banks.) Then you should think again about your idea.

Also, you don't seem to understand some basic concepts: The network is secured even without mining.

ya.ya.yo!

Curious to see what people thought of this idea...

Instead of capping bitcoin at 21mil, what about the idea that after all the bitcoins were mined (we'll all be long dead), of releasing 1% of the current bitcoin total into the public for that year...meaning that the first year after all the bitcoins were mined, bitcoin would release 210,000 more bitcoins into the market at same intervals it is currently releasing BTC (every 10 min) and make them available for people to mine....

I see multiple pro's of a system like this....a few being....

-Bitcoins would continue to be mined and thus the network would be secure indefinitely
-Lost bitcoins would essentially be put back into the market and thus we would not be on a track to lose bitcoins in the system indefinitely
-Inflation would be just under 1% (bitcoins released minus the bitcoins that were lost in the system) which I think would be a solid stable economic number to promote responsible spending...

The 1% number could be adjusted to whatever you thought would be an appropriate amount....

And as always, constructive criticism is always welcome and in the end will make us all learn more at the end of the day, just please don't call me an 'idiot' or a 'moron' if you disagree with the idea, but i don't mind if you call my idea 'idiotic' or 'moronic', just as long as you state your case and the reason why you think that...

Fire away----