Topic: Why is Inflation a Bad Thing? - page 3. (Read 458 times)

I'm not sure if I get this point correctly, but why inflation is required to push economic activity? I'm pretty sure more adoption (merchant start accepting bitcoin, etc) is the key for healthy economic activities, and as you said, not mere speculation. If you want to encourage investment, there is no need to produce more bitcoin. If the supply of the money increase then its buying power will decrease too. Instead of doing that, we should encourage valuable development which will be worth more in the future than today.

I'm pretty sure fiat is supposed to have inflation built into it in order to keep people spending rather than hoarding cash--and yeah, those two examples you gave are when it all goes wrong. 

I don't think bitcoin needs any more inflation added to it, else we might see it become like dogecoin, which can't seem to ever keep any gains in price that it makes. 

In addition, I've always harbored doubts as to whether any crypto is going to be useful for anything other than speculation, and I certainly doubt that a "stock split" maneuver would help that much.  The issue has always been adoption--by merchants and consumers.  Until goods & services start to be priced in terms of BTC (and not the USD, for example), and until people start getting paid in bitcoin, there's no motivation for the average person to use it to buy anything.  Right now fiat works just fine.  That certainly could change if, for example, the USD crashed but in an event like that I suspect people would try to get their hands on a stable currency, which would probably be the fiat currency from another country.  I don't think they'd start turning to a volatile currency that could cause them to lose even more money.

OP, glad you're thinking about stuff like this.  I just happen to not agree with your ideas here.

New coins just turn the market into a trash. I am for limited number of coin only the most liquid should stay.
Also I think that you looked at the inflation not from every side. Imagine yourself in the situation when prices for food, gasoline, government services are growing all the time but your salary stays the same. Not rainbowly, right? Previous example with Venezuela is one of the freshest and hardest examples.

Ask anyone from Venezuela how they feel about inflation. Ask anyone who was an adult in the U.S. in the 1970's what they think about inflation. I'm guessing that you don't think inflation is bad because you have never really experienced it.


You may be happy to know that your suggestion of giving new coins to miners is how it works right now. The current Bitcoin inflation rate is about 4%. It will drop to about 2% in 2020.

I see a lot of anti-inflation sentiment around. I am frankly in disagreement with it all. The 'hodl' mentality is deflationary spiral nonsense which does nothing to help the economy of Bitcoin.

I believe there should be inflation to get the economy of Bitcoin going so the market cap rises on actual economic activity than pointless speculation. This should be fixed at about 1.5% annually. This will encourage investment and commerce, which is the point of a currency.

There are a lot of ways you can do inflation. You could give the new coins to miners, or you could do a "stock split" where the amount of Bitcoin an individual has increases 1.5% annually.

Bitcoin is always being lost. As of 2017, there were 3.8 million BTC lost out of a total supply of 16.4 million BTC. That makes the effective amount of BTC only 12.6 million (at that time).  12.6Mm/21MM is a little over half of the total amount of Bitcoin.

If you had 1.5% inflation, it would take decades to get back to merely 21 million.



If you go with the option of 'stock splits' to induce inflation, no savers would lose out. They would be rewarded from holding.

I don't see why inflation is a bad thing. It makes sense.

Resources:

https://www.independent.co.uk/life-style/gadgets-and-tech/news/bitcoin-price-lost-mining-how-to-find-cryptocurrency-value-chainalysis-satoshi-nakamoto-a8091851.html