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If the total number of bitcoins is increasing all the time, then does that mean that the value of my bircoins are decreasing all the time?

Or am i just so used to thinking along the lines of the system of money creation used by the banks?

IF the value of bitcoins is solely dependent on the value that people are willing to place on them, then their value is only as valuable as the current perceived value?

Seems contradictory, or is it?

Wait a minute.. did i just ask a question, or answer one?

  • Decreased money supply leads to increased value in principle. – CodesInChaos Dec 10 '13 at 16:55
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In total there will be only 21 milions of Bitcoins floating around the world. That means that the more people are interested in it, the higher value of 1 Bitcoin. Also it is worth mentioning that this will happen in more than a 100 years! Currently only 12 milions were produced and the growth will continue slowly for years. Interest in Bitcoin is much faster than it's production so no - it will not loose any value because it is more bitcoins. It will only loose value if people loose their faith and stop accepting it as a currency which is not the case at this moment :)

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The value of a bitcoin is determined solely by what other people are willing to give you in exchange for it (dollars, euros, pizza, etc). One factor which affects this value is the number of coins in existence and how it grows; as you say, standard economics predicts the increasing number of coins will tend to decrease their value.

But there are many other factors, some of which could counteract this, such as people's estimates of the currency's security, anonymity, future government regulation, mining hardware technology, volatility, investment value, etc. It's very difficult to predict whether the combination of all these factors will increase or decrease the currency's value in the long run.

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