Comment by flashmob | Hacker News Reader

Comment by flashmob | Hacker News Reader

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Note that at this time, bitcoin is still very much inflationary, with 1800 new bitcoins being generated every day. This puts the annual inflation rate at 4.01%. Source: http://www.bitcoinblockhalf.com/

Perhaps real deflationary effects of bitcoin will probably kick in after 3 halvings (about 10 years?), when the number of bitcoin that is being lost naturally becomes greater than the inflation. However, at that stage, bitcoin fees would need to dramatically increase from what they are now.

This is probably a paradox of deflationary crypto-currencies: They need to raise revenue from fees to pay for validation/security, however if there's more incentive to hold rather than spend them, their revenue raising ability becomes constricted. Whenever this is true, I'm excited that we'll find this out in the future.

I didn't mention bitcoin. I was arguing the abstract merits of inflationary vs deflationary currencies, from a vaguely-game-theory perspective.

yep, I was just using it as an example to make a general statement that I made in the third paragraph. Do you agree or not? Was wondering what are your thoughts on that

It's an interesting point.

Already there is an awful lot of money being paid in bitcoin tx fees, and it's rising over time, and I can't see any reason for it to start going down, so I don't think it'll be a problem.

Deflation means the value of the currency is increasing. It does not mean the amount of units of that currency is increasing.

yes, but that's usually the accepted definition in the crypto-currency world (eg. see the source link I've posted where they use it in that context too).

There are different definitions of inflation/deflation, but the price is always a function of supply-and-demand, therefore it all boils down to the supply, where the issuance rate & eventual supply cap is what gives a crypto-currency its inflationary/deflationary properties.

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