16

Specifically, bitcoins are immune to M0/MB inflation, meaning that the money supply itself does not inflate, except at the very beginning (which we're still in) while the original 21 million BTC get distributed via the mining process. Once 21 million coins exist, they become deflationary since no new coins are issued and, as naturally occurs, money falls out ...


14

Year #bitcoins Inflation per annum 2009 1,624,250 - -------------------------------------------------- 2010 5,020,250 209.1% 2011 8,001,400 59.4% 2012 10,733,825 34.1% 2013 12,199,725 13.7% 2014 13,671,200 12.1% -------------------------------------------------- 2015 15,029,525 ...


8

Technology is helping with this. For instance, I don't know what the fair price is for a GPS device that I see for sale at Best Buy, for instance. I whip out my mobile and do Amazon price check to see what the price is elsewhere. This app could just as easily display the price in BTCs. So therefore, we already are getting in the habit of distancing from ...


8

This paragraph from Wikipedia explains the confusion: The term "inflation" originally referred to increases in the amount of money in circulation, and some economists still use the word in this way. However, most economists today use the term "inflation" to refer to a rise in the price level. An increase in the money supply may be called monetary ...


7

There are two objections I would raise: Miners have expenses. You need to pay your power bill. You need to pay your employees. You need to pay for new ASICs when the old ones inevitably become obsolete. You need to pay off your initial investment in ASICs. All of these things cost money. You might object that miners wouldn't be doing this unless revenue ...


6

There are many causes for inflation, but the two most often agreed upon, according to Investopedia, are these: Demand-Pull Inflation - This theory can be summarized as "too much money chasing too few goods". In other words, if demand is growing faster than supply, prices will increase. This usually occurs in growing economies. Cost-Push ...


6

As I understand it, this is by consensus, i.e. all the nodes in the network agree on this protocol. No. The network doesn't vote to change itself. Read this: What can an attacker with 51% of hash power do? Arguably, you could try to get a change to the bitcoin client implemented through astroturfing. Here's how you'd increase monetary inflation. Find this ...


4

The Money supply with Bitcoin is designed to increase in value. Effectively the money supply grows by allowing the prices of goods and services to fall to fit the amount of Bitcoin required. Yes this encourages saving. But saving increases the value of Bitcoin, making prices fall further, until prices are so low people are willing to spend their savings/...


4

Not everybody needs to agree (that would probably never happen!) for there to be a change in the protocol (which would be needed to cause inflation), but it's not based on just a majority of hashpower either. It's really a vast majority of users that need to agree; if just 51% of users decided to change the protocol, it's entirely possible that it would ...


4

This is a tough question. I'd consider Bitcoin as being just deflationary. Why? Because, instead of thinking about mining as "adding new currency", you could consider that mining is just "enabling" more coins each block from the 21 million total coins. Everyone knows that ultimately there will be 21 million coins, just not all of them are spendable. ...


4

There is a few problems with giving a crypto-currency a stable value algorithmically: Stability compared to what? The algorithm would have to be specifically pegged to either an asset, a currency, or some kind of calculated wealth index. But, if it were stable in comparison to e.g. the USD, it would not be stable in comparison to other currencies, or a ...


3

I would suspect that most Bitcoin advocates would disagree with you. The simplest counter-argument is this -- wouldn't that mean inflation discourages people from selling things? And you can't spend if nobody wants to sell to you, can you? Another way to make the same counter-argument is this: Actually, no, deflation encourages people to spend the bitcoins ...


3

Bitcoins are created at a predetermined rate. Until this rate drops to 0 (around the year 2140), the supply of bitcoins is increasing. If this isn't offset by destroyed/lost coins and increased demand, some amount of inflation will occur. However, I'd expect the inflation rate to be low (if positive at all), and getting lower. Once all ~21 million bitcoins ...


3

Considering that the US dollar has lost 90% of its purchasing power over the last 100 years you should be worried regardless of cryptocurrencies.


3

No it does not become computationally infeasible, 1 halving per 210.000 blocks leads to a total of 21m due to math. Bitcoin block reward is 50 for 210.000 blocks then 25 for 210.000 blocks then 12.5 etc. So the total reward is 210.000 * (50 + 25 + 12.5 + ...). Inside the parenthesis is a geometric series which can be rewritten as 50 * (1 + 1/2 + 1/4 + ...). ...


3

It appears to largely be just a belt-and-suspenders check. As you say, it is unnecessary to do this check. However it doesn't hurt to have this check in there. At worst, it just adds a few nanoseconds to verification time. At best, it will catch some serious bugs. Given that this is consensus related, it does not hurt to have extra checks that are ...


2

Fiat currencies are inflationary by design, so that people don't hoard currency. The more your money loses value every year, the less likely you are to keep it sitting in a bank. This availability of money in the market encourages the growth of the economy. When money is easy to borrow, entrepreneurs and businesses can use it to hire/build/invest, and pull ...


2

First of all, there's nothing wrong about some inflation or deflation in general. You can hear lots of flame from various economists, some of them trying to persuade you that a small inflation is beneficial or even essential, but this is not necessarily true (one example is IT hardware market). OK, that was just a note to calm down and think first when ...


2

The answer to this question depends on the terminology used. "To inflate" normally means "to increase the volume". "To deflate" is the opposite. In this sense, bitcoins were inflationary in 2013 (the inflation was ca 15%) and will be inflationary in 2014 as well. At the same time, bitcoins were undergoing hyperappreciation in 2013 (bitcoin appreciation ...


2

It seems to me that your confusing the number of bitcoins in existence with the value of bitcoins in existence. "Because lets say you have one bitcoin that is worth 1 dollar and I sold you something that only cost one penny than your saying I would recive 0.01 Bitcoin." Say for instance that there will only ever be 21 million pounds of gold in the world....


2

Yes, the information is public and in the ledger history. you can find how inflation works in Stellar.org's mandate https://www.stellar.org/about/mandate/#Stellar_creation and https://www.stellar.org/developers/learn/concepts/inflation.html in a nutshell: you can look at the inflation transaction that runs every week and look at its metadata. The metadata ...


2

Let's compare the total size of circulating BTC to US dollars. According to coinmarketcap.com, the total value of all Bitcoin is 250 billion as measured in US dollars. Throw in Ethereum, Bitcoin Cash, IOTA, Ripple, Monero, Dash, Bitcoin Gold and Litecoin, and you're at 350 billion US dollars. (Bitcoin makes up the sizable majority of all cryptocurrency.) ...


2

Inflation is increase in price without increase in utility. A car with similar features helps you get from point A to point B just like it did one year ago (same utility). However, the cost of the car increased by 2x one year later (higher price) indicating that the currency in which the price has been quoted has been reduced to 0.5x versus its value last ...


2

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.


1

"[...] is it possible for this third party to lend my bitcoins [...]" If the bitcoins are in your address and only you know the private key of your address, then nobody else can move your bitcoins away from your address. However, if you deposit your bitcoins into a third party, theoretically they could do fractional reserve like normal banks do. This ...


1

Not directly. The gateway would have to create a transaction for each user, to award them their interest. It would not be built into the protocols as demurrage is. So it would really be up to each gateway to decide who would get interest and how much (and if this process breaks down, no interest gets paid)


1

GRouPcoin is an inflate-forever coin (50 coins per block forever, not halving/halting like multiple others) and all proceeds go to miners. http://devtome.com/doku.php?id=groupcoin It is the predecessor of Devcoin. Rarely used but has recently been one pool mining it (bitparking).


1

PPCoin and its offspring NovaCoin have an infinite money supply - even though the reward for blocks gets diminished over time (as in Bitcoin et al.), as the money supply increases there will be more and more coins offered as reward for simply hoarding the coin. There are also built-in deflationary mechanisms for destroying coins with every transaction, so ...


1

Has demand already outstripped supply? Yes, in fact it happens hundreds of times each day. The evidence of this happening comes with each uptick on the market price ticker. What I mean by that is that with a currency that floats there is a limited supply at a certain price point. Once those are sold and no new sellers wish to sell at that price, then ...


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