Doubling Bitcoin value in two months represent normal Bitcoin operation???

[aarreeaa]

Whats with that kind of deflation?
Edited: Previously I improperly used term "inflation" while I was actually addressing concerns about deflation.

Once inflation bubble bursts, most get burned and product's market value declines below perceived bottom.
Prices then stabilize until more and more new participants enter the market... that can potentially create new bubble and cause it to happen all over again....

History chart shows that Bitcoin value crashed during ~Jun 2011

Can it crash that same way again?
Is it likely to happen?

[aarreeaa]

vipes2010, Now Im more confused - I though that bitcoin's value doubling meant that more people were using it.
If $500K were stolen (lots of transactions) = bitcoin value drops a lot
report about software glitch = many sell = decrease in bitcoin value

So, the more popular it becomes, the less its worth...?
Thus, when/if I decide sell stuff on my sites for bitcoin, i directly reduce value by small fraction?

I cant make sense of it. Kill me now.

[xdaxdb]

When the value of a currency increases that is not inflation. Inflation is what it's called when your money loses value over time... so you can go ahead and stop using that term that might be what is confusing you.

To grasp why Bitcoin values go up and down you need to think of it like a stock or a commodity. The more people use Bitcoins and the more merchants accept them their value is going to go up because confidence in them will create demand. If people are losing Bitcoins left and right, or merchants stop accepting them then their value will go down.

[BTC Books]

Doubling Bitcoin value in two months represent normal Bitcoin operation???

Whats with that kind of inflation?
 

What xdaxdb said above.

Inflation is not value.

Bitcoin is a very precise thing.  You should get used to using very precise language when discussing it.

If you don't, once you get out into the world - the rest of the forum that is - you'll find yourself in the position of bending down to pick up a bar of soap in the public showers at Folsom Prison.  If you catch my drift...

[Gator-hex]

In a way Bitcoin is a scam, they reward less and less coins as time goes on, which makes them more valuable as supply decreases.

Doubling in price was to be expected from halving the reward.

Knowing the date of halving in advance make arbitrage scams easy to pull off in the Bitcoin world. 

[Gator-hex]

If people are losing Bitcoins left and right ... then their value will go down.

There are two bitcoins chasing an asset worth 1 bitcoin.

You have one coin, I have one coin.

You lose your bitcoin, the bitcoin supply is now half, the item becomes worth 0.5 bitcoin.

The value of bitcoin did not go down from your loss, it went up, I can now buy two items.

Bitcoin is a deflationary currency.

[aarreeaa]

When the value of a currency increases that is not inflation. Inflation is what it's called when your money loses value over time...

When same quantity of product cost more and more, thats inflation!

Example: Im holding $, you BC.
Assuming that $ is ~constant and BC value continue to increase:
From my perspective thats inflation, from your - deflation.

[Gator-hex]

When same quantity of product cost more and more, thats inflation!

Inflation is the increase in money supply, more money chasing the same assets, prices rise.

Deflation is the decrease in money supply, less money chasing the same assets, prices fall.

[Raoul Duke]

In a way Bitcoin is a scam, they reward less and less coins as time goes on, which makes them more valuable as supply decreases.

Wrong.
Bitcoins supply is well defined and it will not ever reach 21 million coins.
The reward halving doesn't decrease supply. In fact the supply will increase for more than 100 years, until the block reward reaches 0.

Here's a graphic for you, in case drawings are easier for you to read.

[Gator-hex]

Halving the reward doubles the cost of production.

Imagine I mined an ounce of gold, then gave it to king of gold, and he gave me back half, doubling my cost to reward.

That's the weird and wacky world of bitcoin mining for ya.  

The rate of new coin supply is decreasing.

[aarreeaa]

No, the more people that use it and want it, the higher the value.

Thats exactly what would make logical sense.

However, data shows such assumption to be wrong.

Recent bug report = people cashing out = more BC transfered.
Why did BC price drop by ~$4???

[Lethn]

Whats with that kind of inflation?

LOL! Inflation! AHAHAHHAHAHAHAHAHAAAA!