Bitcoin Forum

We all have heard about inflation.
Inflation is very bad.

It is when a good or product (or even money) is produced again and again, indefinitely.
It is when a product is not limited in its existence.

From an investment perspective, it is very important to look out for capped assets to avoid inflation of your asset.
Because when your asset is produced again and again, each unit will lose value because more units will exist because more units are produced constantly.
Producing an asset again and again, for an indefinite time, is inflation.

Avoid inflation in your investments by only choosing coins where coin numbers are capped and have a total limit:

Some capped coins:
- Bitcoin (21 000 000 coins)
- Litecoin (84 000 000 coins)
- Avalanche (720 000 000 coins)

When you talking about capped coin are you talking about market cap? Because I really don’t get you, to digress a little bitcoin being capped doesn’t mean it’s above inflation, infact every coin can be affected by globalized inflation, since the price of a coin is affected by demand and supply and we the enthusiast (investors, buyers and sellers) are human factors that affect the demand and supply chain. Then invariably any coin can be affected by inflation.

The problem is if the coin can inflate so easy like what happened with some tokens with unlimited supply. The coin like mina protocol has unlimited supply and the price can go down even more as the more coins printed and distributed to the market and the more chance for the price to go down even more. I do agree with you about that but just remind you that if we have ethereum that doesn't have maximum supply but it's on the top 2 of CMC.
So, what about that?

Bitcoin is exceptional. But if that's the standard for choosing a coin to invest in, I'll agree with you but not at all times. Because there are also altcoins that have a cap in terms of supply limit but that's still not enough for them to be in the mainstream.
It'll be composed of many factors before a coin becomes considered a good coin. There are even coins that are good yet they don't have a cap on their total supply.

Inflation ruins the whole market right now, not just some individual coins, max supply cap or not. Even top altcoins take a hit from the after effect of high inflation on the stock market and world economy. So the max supply cap isn't mean much right now or seems like relates to the current bear market. I'm sure if they did have a capped supply but with a trillion amount of coins, it isn't helping much. How much they can be printed/mined is also a problem as well.

Although I agree with you it's not just inflation that will kill a coin.  There are so many other bigger reasons why a coin would "survive" or not and I'd put inflation down the bottom of the list.  Since most are not needed to even begin with I'd argue with or without max supply they were never destined to survive anyway.

There are not many deflationary assets and they are not interesting for most crypto tourists, because it is not possible to make money on them quickly. For long-term investing in the project, parameters such as deflation or scheduled burning of coins by developers are definitely important, this way excessive supply is constantly withdrawn from circulation and it has a favorable effect on the price in the long run. I would also like to note that one should stay away from coins with large pre-mine, because such projects are extremely centralized in terms of circulating supply and liquidity in such projects can be quickly withdrawn by the developers of this very coin.

I talked about a capped supply coin.
Like 21 000 000 coins for Bitcoin, 720 000 000 coins for Avalanche or 84 000 000 coins for Litecoin.
It's a truly capped supply.




It will turn out very bad long term in terms of value.
Just imagine, some inflation every years for such coins, some have already lost so much value because of inflations and some coins / tokens existed even only 2 years. So, imagine what will happen after 20 years? It will be huge inflation and huge loss for some coins or tokens.

Solution: avoid inflation in your investments by only choosing coins where coin numbers are capped and have a total limit


Wow, yes, good example. It will be huge loss if it's really unlimited supply, when a lot of more coins will be distributed and come into circulation. Price will dump a lot over time, step by step.


Ethereum is burning transaction fees.

The burning transaction fees already started to be implemented last year and before the burning concept already implemented, ethereum didn't even have burning mechanism but it was touching ATH when the burning mechanism has not yet implemented.
To be honest if this will be going back to the demand again. I meant as long as the demand keep sustain and the price can't be dumped easily but i can't even deny if block halving was also playing a lot in this case to decrease the inflation

For Ethereum to rise again and again, it needed continuously increasing demand which later on would have turned out to be some sort of pyramid scheme.  By either adding a supply cap or burning and turning the supply deflationary, you are making it easier for the asset's value to appreciate over time.

I agree it is utterly stupid to have inflationary or even extremely inflationary coins and think they are going to rise in value.  They are all being ruined in time because such coin requires more and more capital to be poured often and demand to increase continuously, or else the coin starts bursting like a bubble.

We have various examples of such coins that offer extremely high annual earnings but even if you get a lot of coins, it is ultimately useless if by the time you earned a million coins the price you get per coin is not $1 anymore but $0.000001.

But after all.  To me at least, this should be straight up logic and common sense.  If any limited production suddenly has its limit cap removed, the price of that thing will obviously never appreciate in time.

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Regards,
PrivacyG

What you need to know is not all limited supply coins is guarantee the price will increase in the future, because the price is based on demand and supply on the market, not the supply from the max supply. Many people who doesn't interested with those coins, wouldn't make an offer on the market. Without any offer, the price will goes down as below $1.

However just a question, if max supply coins suppose against inflation, we're in high inflation rate, why those coins price also drop not increase?

Total supply makes sense to restrict price of a coin. With same product, same intrinsic value, the higher total supply, the less price for that coin. The point is with same marketcap (assumes it is reflected well by its product, protocol, intrinsic value), higher total supply means lower price.

Also please note that total supply is a figure you believe in, some tokens can be minted more from thin air so the total supply you see today can be just 1/10 of its future total supply. Luna Classic is an example.

Bitcoin is a very good coin because its total supply is 21M, and no one can create more. It was set in 2009 by satoshi nakamoto.

The inflation can be prevented with the burning mechanism like what already happened with ethereum and binance recently. So, it's not always become the main reason why the coin or token will be dead unlike the developers that has no effort to prevent it to happen. What about that? that proves if inflation will not always ruin the future of coin as long as developers were implementing the right thing.

I agree that in general inflation of a coin has always negative impacts on the price of a crypto project and to be honest i don't really understand it why some teams behind crypto projects decide to make their tokenomics in a way that the emission of new coins never stops not even in a few dozen years. Polkadot is a good example for that. It is a great project no doubt about that but if the total supply of polkadot would not be infinite then i think the price per DOT would be even higher than it is now.
Another example for an unlimited total supply is Radix. There you get around 11% of APY on your staked coins. There are some calculations out there about how many transaction are needed in order to become deflationary, but at the moment it is definitely inflationary too.

Limiting the supply is a big thing, imagine burning millions of money from time to time. BNB is very active on doing this, they are committed and its really good to invest on good coins which ables you to minimize the possible inflation problem. If you have those good coins and bought this time of a bear market, there’s a high probability of making more profit in the future. Inflation can affect everything, better to know the best thing that you can do to beat that inflation, there’s a lot of ways to do this.

Most token/coin is have maximum supply.

I think taken from this aspect is not really good too, one thing even the coin/token is capped the value still lose. Want a really best advice? stay away from ICO/IEO or something token from fundraising.

Most of ico project is failed with a long term.

Those are the old ways to collect money from investors, and I can say that its really not rewarding anymore and not worth it, that’s why many are skipping the ICO/IEO phase and just wait for that project to enter in the market. There’s a pros and cons of having a limit, but in the long term you can only see them getting more expensive. Inflation is something that we cannot stop, even the government knows this one so better to look for the investment that can over pay the inflation and wont make your money cheaper. Cryptomarket can beat the inflation, you just need to look for the best option.

Inflation is not only bad things and it also make some good things.Inflation will create the demand of the cryptocurrency.So it will increase the crypto currency demand,it may bitcoin,ethereum and Avalanche.It’s like the demand pull inflation,it will adjusted only because of the demand increase.Inflation will ruin almost all the cryptocurrency near your place.Inflation was the sole reason for the money flow into the economy,So it was reason for the coin price variation.

We have seen an example way back weeks ago.  When Luna developers try to inflate their daily production of tokens, the economy crashed really hard.  Since the market value is dictated by supply and demand, the inflation of supply and demand lagging behind, it will really make the price of any cryptocurrency dip.

Isn't it obvious though, I mean with a coin that has billions of supply, it will have to had billions of investors as well just to be able to have a good value. As compare to the bitcoin, very limited, the demand is high and everyone wanted to have a piece of it.

And maybe this is one reason why tokens or coins have this so called "burning" process". So that taking a number of X amounts will drive the value.

if the supply of a coin is locked and limited, it's a great idea indeed it could increase the value of that coin overtime but as long as that coin is famous.
there are so many limited supply coins out there that's just valueless because being limited supply isn't always the key, ethereum despite having a system that keeps mining new ethereum everyday still could hold its value because it was deemed as a great project.
so basically as long as the project is great and it has strong fundamental, both limited and unlimited supply is fine I guess.