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Why does halving won't make inflation on bitcoin? and does this halving (2020) have difference affect?

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    Why would you expect halving to cause inflation? It would be helpful if your question contained a basis for this proposition. May 12 '20 at 15:57
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Inflation is "a general increase in prices and fall in the purchasing value of money."

One cause of inflation is printing more money.

By halving the rate of production of new money you halve its inflationary effect.

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The currency supply of Bitcoin currently inflates at about 2.5% p.a.. However, this is what economists refer to as monetary inflation. The supply is disinflationary, because the rate of monetary inflation is decreasing over time as each block increases the supply by a smaller relative amount.

When people speculate about Bitcoin being inherently "deflationary", they are not talking about monetary deflation, but about price deflation. Given the decreasing growth of Bitcoin's monetary supply, the underlying expectation is that the total value of the Bitcoin network will increase faster than the supply which would mean that the purchasing power of Bitcoin is going to increase over time.

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Inflation is when there's too much money in the economy, thus too much demand for goods paid with this currency, thus causing general price levels in terms of this currency to rise. Halving reduces (the increase in) the supply of coins. Less money = less demand = less demand-pull inflation (also called inflationary pressure) -> prices don't rise.

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Because there in no inflation in the Bitcoin system. Using bitcoin all users agree to the rules of consensus, one of them being that there will never be more than 21 million in the system. The reason that "halving" was included in the software code has nothing to do with ether inflation or deflation but something very different. How to distribute the coins to begin with. In the beginning, There was no utility to using the system to communicate value over the network. So to incentivize participants to use resources (hardware, electricity, bandwidth, etc.) to secure the peer to peer network 50 coin miner reward was added for each block, and that is coded in the software to be cut in half about every 4 years.

Over time if there is utility to using the system, it will be enough for it to be self sustaining by just rewarding the miners the fees to include transactions on the blockchain. So there can not be any inflation we know there can't be more than 21 million, but because people may lose private keys, there may be some deflation. Lost coins make the rest of them worth a bit more.

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  • "There is no inflation in Bitcoin" is false. Inflation happens when the money supply is larger than the supply of things to spend it on. The limitation on the number of coins has no impact on the supply of things to spend it on, and has only a small effect on the money supply (it's basically a limit on the "MB" measure, while the best predictor of inflation is the "MZM" measure of the money supply). You can see this by looking at the Bitcoin exchange rate -- Bitcoin has undergone several periods of hyperinflation in its history.
    – Mark
    May 14 '20 at 3:02

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