Is it still deflationary?
Wondering if I should invest in the coin itself (which makes sense for deflationary coins) or a company doing something with it (which makes sense for an inflationary coin)
Wondering if I should invest in the coin itself (which makes sense for deflationary coins) or a company doing something with it (which makes sense for an inflationary coin)
Conventional economists use "deflation" to mean "price deflation" -- that is, the price of goods, on average, decreases over time, as denominated in the currency in question.
Austrian (heterodox) economists often use the term "deflation" and "inflation" to refer to changes in the money supply, rather than prices.
In the crypto space, people often use the term "deflationary" to refer to currencies that do not increase exponentially in supply; or more specifically whether the marginal change in supply is decreasing.
For 1, no -- saying "Ethereum is deflationary" is equivalent to saying "the value of Ethereum will always go up", which is clearly nonsensical, because it's saying that Ethereum is a risk-free investment.
For 2, no, Ethereum is not deflationary, the supply increases linearly, so the supply is always increasing.
For 3, yes, Ethereum is deflationary, because the supply increases linearly, which means the marginal change in supply tends to zero.
Your question about investments seems to be following the implication that if 3 is true, then 1 must be true, since they both use the word "deflationary". That may be the case, but I would hesitate to think that a mechanical system can guarantee an increase in value.
People use "deflationary" for hard-capped supplies, "disinflationary" for uncapped supplies that have yearly inflation rate going down toward 0 (such as with a pure linear emission), and "inflationary" for emissions whose yearly inflation rate stay above some constant greater than 0.
It does make sense if you compare a less inflationary currencly to more inflationary currencies. It's risk free in the sense that the USD exchange rate will keep up with inflation of the USD in the long term.
So you can compare how "inflationary" currencies are by 2 & 3, but not by 1 -- that's not a mechanical effect. Even the most stringent monetarist in the world wouldn't at a minimum factor in monetary velocity into the value equation. And monetary velocity is a behavioral thing that can be mediated both by availability of current and future capital as well as liquidity preferences of individuals viewed in aggregate.
Inflation = value of money decreases.
Sargos seems to be confusing 'inflation' and 'monetary inflation' (increase in money supply).
As a matter of fact, knowing how many ETH will be produced over a given period of time is a question I never managed to get a satisfactory answer to.
There's probably an algorithm buried somewhere in the code, but it's likely not a simple one.
For PoS, issuance is a formula depending on the amount staked. How that works out: https://docs.ethhub.io/ethereum-roadmap/ethereum-2.0/eth-2.0...
If you want to dig into the actual formula, it's explained here: https://benjaminion.xyz/eth2-annotated-spec/phase0/beacon-ch...
Until PoW migrates to PoS, probably in about a year, they'll operate in parallel and we'll have both rewards added together.
A final factor is an upcoming change to the way transaction fees work, which will burn most of the fees instead of awarding them to validators. That will reduce net issuance further, possibly even taking it negative.
In any case, by the time the full transition to PoS is complete, one thing that will be easy for the market to know is that issuance will be substantially lower than BTC, and possibly negative depending on transaction fees.
So Ether's (in/de)flationary behaviour is a consequence of multiple factors: network consensus participation (mine or stake), network utilisation (burn due to gas fees for using the Ethereum VM), and network parameters (block or epoch reward)
Some people, Austrians define any change in the amount of base currency as inflation/deflation. This is the traditional definition.
However the normal everyday usage of inflation/deflation talks about the 'General Price Level', usually measured with things like GDP Deflator, or CPI. Some way of trying to measure the general price level. All of those measures are imperfect.
By the first definition, both Bitcoin and ETH are inflationary but only slightly so.
By the second definition it is very hard to say because we don't really have a way to measure it.