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Author Topic: current bitcoin inflation is about 50%  (Read 3600 times)
grondilu
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February 02, 2011, 12:53:21 AM
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We should not forget that we are in inflationnary phase.  A lot of bitcoins are created right now, and will be until 2013.

So unless we have an even bigger and faster increase of user base, bitcoin value should not increase that much.

So even if it seems that the market wants to see the BTC/USD parity, we have to expect a big correction after this happens.


IMO
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jimbobway
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February 02, 2011, 01:10:13 AM
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How did you come up with 50%?

We don't have to expect a big correction a parity.  Could go sky high!
grondilu
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February 02, 2011, 01:22:43 AM
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How did you come up with 50%?

Well we're at about half of the first 4-year period.

That means that the total amount of bitcoins will double in two years.  Thus 50% a year.
kiba
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February 02, 2011, 01:27:18 AM
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Demand for bitcoin is higher than he inflation rate.

grondilu
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February 02, 2011, 01:28:21 AM
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Demand for bitcoin is higher than he inflation rate.

This will be true if and only if we double our user base in two years.
Stephen Gornick
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February 02, 2011, 01:40:10 AM
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That means that the total amount of bitcoins will double in two years.  Thus 50% a year.

But that is 50% is much less than what we've been seeing so far!

In 2010 the bitcoin currency inflated approximately 100% (from roughly 2.5 million to 5. million).   So, on a percentage basis, the rate of increase of the currency is slowing, from 100% in 2010 to to 50% in 2011.

Very rough year-over-year "inflation" numbers:
2009: n/a
2010: 100%
2011: 50%
2012: 33%
2013: 13%   (Why so low?   Because generation drops from 50 BTC to 25 BTC.)


grondilu
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February 02, 2011, 01:45:36 AM
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That means that the total amount of bitcoins will double in two years.  Thus 50% a year.

But that is 50% is much less than what we've been seeing so far!

In 2010 the bitcoin currency inflated approximately 100% (from roughly 2.5 million to 5. million).   So, on a percentage basis, the rate of increase of the currency is slowing, from 100% in 2010 to to 50% in 2011.

Very rough year-over-year "inflation" numbers:
2009: n/a
2010: 100%
2011: 50%
2012: 33%
2013: 13%   (Why so low?   Because generation drops from 50 BTC to 25 BTC.)

Well, yes, this is true.

I guess in the past (especially in the last 6 months), the increase of bitcoin notoriety has been huge.  Even greater than inflation.
kiba
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February 02, 2011, 01:50:20 AM
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I guess in the past (especially in the last 6 months), the increase of bitcoin notoriety has been huge.  Even greater than inflation.


We are notorious?

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February 02, 2011, 02:05:20 AM
 #9

How did you come up with 50%?

Well we're at about half of the first 4-year period.

That means that the total amount of bitcoins will double in two years.  Thus 50% a year.


This is actually not inflation.  It's called disinflation: http://en.wikipedia.org/wiki/Disinflation
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February 02, 2011, 03:24:39 AM
 #10


We should not forget that we are in inflationnary phase.  A lot of bitcoins are created right now, and will be until 2013.

So unless we have an even bigger and faster increase of user base, bitcoin value should not increase that much.

So even if it seems that the market wants to see the BTC/USD parity, we have to expect a big correction after this happens.


IMO


I think you're greatly underestimating the growth of the bitcoin economy. the monetary inflation of bitcoin is NOTHING compared with the growth in demand. Growth is exponential at this stage because economic growth is proportional to economic size: The more bitcoin is used, the more people will want to use it. This is true because bitcoin is awesome, as we all know.

Sure, there will be double the amount of coins in 2 years (or whatever the numbers are), but there will be hundreds of times the current demand as well. Just look at how the value has increased over the last few months. You think this will likely flatten out, I think it's much more likely that it will accelerate even more and continue to do so, almost until bitcoin is universally adopted. Unless, of course there is some terrible catastrophe which sends the value of bitcoin to zero.
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February 02, 2011, 03:32:02 AM
 #11

Quote
This is true because bitcoin is awesome, as we all know.


 Cheesy
Stephen Gornick
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February 02, 2011, 04:25:27 AM
 #12

This is actually not inflation.  It's called disinflation: http://en.wikipedia.org/wiki/Disinflation

This is actually not disinflation.  It's called an increase in the money supply: http://en.wikipedia.org/wiki/Money_supply

So while inflation is not necessarily an incorrect term to use when referring to what an increase in the money supply is doing, it is too easily confused with price inflation.

jimbobway
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February 02, 2011, 09:59:22 AM
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This is actually not inflation.  It's called disinflation: http://en.wikipedia.org/wiki/Disinflation

This is actually not disinflation.  It's called an increase in the money supply: http://en.wikipedia.org/wiki/Money_supply

So while inflation is not necessarily an incorrect term to use when referring to what an increase in the money supply is doing, it is too easily confused with price inflation.


Sure ok. But I think the deceleration of inflation better explains why the price of bitcoin will increase even though there is inflation.  The growth in money supply will decrease in half until there will be no more growth.  

If I knew there will be less bitcoins minted next year then then I would buy more this year.
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