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Ugam Kamat
Ugam Kamat
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Will cryptocurrencies that have a market capfinite supply (like 21m btc) cause deflation?

I figured out that cryptocurrencies can cause a deflationary spiral, since the cap is the same (eg. 21m BTC) but the economy is growing. That would only happen if all coins are mined.

But deflation would usually lead to a recession. Is there a way to prevent that?

I've done some research, like on the Bitcoin Wiki page deflationary spiral, but I don't seem to understand why deflation won't happen.

The ‘deflationary spiral’ is a real condition that affects the popular fractional reserve backing system. Bitcoin is not affected by this because it is fundamentally different from popular currency.

I would really appreciate help. Thanks.

Will cryptocurrencies that have a market cap (like 21m btc) cause deflation?

I figured out that cryptocurrencies can cause a deflationary spiral, since the cap is the same (eg. 21m BTC) but the economy is growing. That would only happen if all coins are mined.

But deflation would usually lead to a recession. Is there a way to prevent that?

I've done some research, like on the Bitcoin Wiki page deflationary spiral, but I don't seem to understand why deflation won't happen.

The ‘deflationary spiral’ is a real condition that affects the popular fractional reserve backing system. Bitcoin is not affected by this because it is fundamentally different from popular currency.

I would really appreciate help. Thanks.

Will cryptocurrencies that have a finite supply (like 21m btc) cause deflation?

I figured out that cryptocurrencies can cause a deflationary spiral, since the cap is the same (eg. 21m BTC) but the economy is growing. That would only happen if all coins are mined.

But deflation would usually lead to a recession. Is there a way to prevent that?

I've done some research, like on the Bitcoin Wiki page deflationary spiral, but I don't seem to understand why deflation won't happen.

The ‘deflationary spiral’ is a real condition that affects the popular fractional reserve backing system. Bitcoin is not affected by this because it is fundamentally different from popular currency.

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Andrew
Andrew
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Will cryptocurrencies that have a market cap (like 21m btc) cause deflation?

I figured out that cryptocurrencies can cause a deflationary spiral, since the cap is the same (eg. 21m BTC) but the economy is growing. That would only happen if all coins are mined.

But deflation would usually lead to a recession. Is there a way to prevent that?

I've done some research, like on the Bitcoin Wiki page deflationary spiral, but I don't seem to understand why deflation won't happen.

The ‘deflationary spiral’ is a real condition that affects the popular fractional reserve backing system. Bitcoin is not affected by this because it is fundamentally different from popular currency.

I would really appreciate help. Thanks.