Price-Deflation is what you are used to hearing about in Bitcoin. That term is used to describe the prices of goods/services as they decrease, because the value of Bitcoin goes up.
Price-Inflation is the opposite. When prices of goods/services increase because the value of Bitcoin goes down.
So, when dealing with Price-Inflation or Deflation, there is an inverse relationship of price and value, in regard to goods/services and Bitcoin.
Example: As the Bitcoin price goes from $10 to $20, the prices of goods/services goes down from 20BTC to 10BTC. As the Bitcoin price goes from $20 to $10, the prices of goods/services goes from 10BTC to 20BTC!
Why does the price of Bitcoin go up and down? The price of BTC goes up and down based on the exchange rate, or market price, which is set by buyers and sellers, or traders. They directly trade the Bitcoin currency with all sorts of other currency, and even some with gold; the most popular being the USD (US dollar). They set the price when executing orders to buy or sell. I will get into the actual reason of why the price fluctuates in the last section.
While it may be cute to try to confuse the "fiat" phenomenons of devalued/overvalued Monetary Inflation/Deflation with the "hard" phenomenons of Commodity-Resource Inflation/Deflation, there really can be no confusion and there is little room for any notion of marginal "Price Inflation" save within the context of the introductory Marketing Pyramid of a new Commodity-Resource, Item or Product.
When the first entrepreneur discovered salt, oil or gold for instance, they likely had no idea of the intrinsic-value, utility-value or exchange-values of them. In most all of these cases, the lucky dudes named Sitoshi brought some of their new "intrinsic curiosity" back to the encampment, and noticed their pals also had a curiosity about it, so he promptly gave them some in exchange for a few extra cups of their grog and went back a day or two later to the place he found that for more, to continue his enterprise. He did this because he was made drunkenly aware that this new "common curiosity" of his seemed to have both an intrinsic(curiosity) and what remarkably seemed to be an exchange value!
Meanwhile his pals noticed that you could salt meat to keep it from spoiling and even use it to make other crud taste better or use oil to make wagon wheels move more smoothly or was easier to light for light or heat, others noticed the hottest chicks loved earrings and bangles made out of the yellow shiny stuff. This second echelon "second floor-down" of low price meddlers had developed or discovered that Sitoshi's kool new "commodity" resources had utility value, separate from their common intrinsic value that increased their (greatest and most desirable of all) "exchange value".
Owing to these new discoveries Sitoshi's small second floor-echelon of Sitoshi-Resource Pharoahs began to market their new wares as bagged salt, bottled torch fuel and bullion to make chick-magnet jewellery. Buzz and newly discovered utility values allowed third and fourth floor-down echelons to "Price Inflate" (discover) the same Sitoshi-Resources their wholesalers got for grog into hard assets they could sell for boats, tents and fancier rides for their shorties. Finally fifth and lower floor-down operators in the marketing pyramid's echelon really started to exploit even newer and better utility values leading the price discovery of their new commodity resources into becoming something closer to reaching for the most treasured and coveted crown of either being a utilitarian commodity resource of serious hard-asset exchange value, or just a too-rare "wealth itself". (eg: emeralds)
Of course all these things didn't happen at once because, in the pre-refrigerated ancient world, salt (in high demand) was the first well known and widely traded form of a widely accepted Medium of Labour Exchange Currency (aka "money"). Indeed the further it had to be conveyed to deliver it, the more it's intrinsic value was "Price Inflated".
Salt worked as a "money" only so long as it retained it's aura as a rarity of constantly assured value. Salt's price-demise (Price Deflation) as a currency no doubt came about with the invention of the Sauna bath where people suddenly became aware it was as common as sea water.
While one might find some reason to create the confusion of calling it "price inflation or deflation", most of us properly define those phenomenon as "Price Discovery". Unforeseeable, unpredictable, undesirable and nasty, "behind your back" economic fluctuations caused by Monetary "Inflation or Deflation" are the only "flationy" bubble-type things that everybody always cares about remedying.There are three echelons of commodity resource values:
The top floor is occupied by
Mediums of Labour Exchange Currency of Assured Value
The second floor is occupied by extreme rarities like gems, art, antiques and (lesser) precious metals or
Mediums of SavingsThe bottom floor is occupied by all other (finite or not-so) commodity resources which are
Mediums of InvestmentThe top floor occupants must struggle to retain their tokens value to save everyone from starving to death.
The second floor contains rare and finite things certainly assured to only ever inflate in value
The bottom floor contains stuff that may inflate or deflate in value, it's a circus of games we call an economy.
The seeming "price inflation" of "finite" Mediums of Savings ("hard" assets) are the direct and unavoidable arithmetic consequence of "infinite" (or at least much less finite) economic growth.
Nowadays individual commodity resource "price inflation/deflations" are minute and relatively insignificant components of all large economic pictures, save in the area of marginal profitability and comparative advantage analysis. There's nothing anyone can really do about them, they come and go, they have to exist.
Why does the price of Bitcoin go up and down? The price of BTC goes up and down based on the exchange rate, or market price, which is set by buyers and sellers, or traders. They directly trade the Bitcoin currency with all sorts of other currency, and even some with gold; the most popular being the USD (US dollar). They set the price when executing orders to buy or sell. I will get into the actual reason of why the price fluctuates in the last section.
Bitcoin is a "fiat asset" it is not a "hard asset".
The
Fiat Bitcoin "Bitchain-Securitized Bitcoin Futures Derivative Contract Token" has only a small actual intrinsic value owing largely to the novelty and curiosity of it's uniquely secured residence in the secured encrypted exchange-chain in which it only functions and resides. It also has utility value in the way it's easy to conceal, easy to transport, impossible to counterfeit, is mutually owned and profited from buy all of it's users alone and hopefully (more so in the future) requires no third party to use as a barely somewhat viable "
medium of Byzantine-exchanges".
It's utilitarian value is only that of a contract-token of the past value of the last transaction in which it was involved where it's former owner, by mutually agreed upon "fiat", made off with the asset value of it's current owner. It still has no value other than in the mind of it's current contract owner who bought it's "futures contract" in hopes of getting and making off with an equal or greater asset value for it's possession in the future, when he trades it in (for another fiat labour exchange currency) or "exchanges" it some other product or service.
The reason it's grossly unstable "fiat price" (intrinsic+utilitarian+exchange value) changes so radically, nonsensically and foolishly with such suicidal volatility is because it is abused by it's supposed "promoters" as if it were "somebody else's" penny-stock, ideal for speculators to "play" by "penny stock marketeering" trading-speculation "exchanges" who think they are Wall St.
I'll get to your second and third comments in a bit
