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Author Topic: Assuming bitcoin stabilized in value one day what would the annual rate be?  (Read 1935 times)
notig
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April 09, 2013, 02:53:34 AM
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the annual rate of deflation?

I guess I should clarify: In relation to the dollar. Obviously the dollar inflates at least 3 % or something per year. So that means bitcoin would appear to at least deflate 3% per year (not including growth) right?
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April 09, 2013, 08:57:16 AM
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Bitcoin will not stabilize until it consumes the whole global economy. Dollar price will become irrelevant before that moment: people would dump dollars en masse when BTC is in hands of 1% of all people.

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April 09, 2013, 12:07:25 PM
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the annual rate of deflation?

I guess I should clarify: In relation to the dollar. Obviously the dollar inflates at least 3 % or something per year. So that means bitcoin would appear to at least deflate 3% per year (not including growth) right?

Very simple: Assuming that bitcoin stabilized in value its deflation rate measured in dollar is dependent on the dollar printing activity of the FED minus the known annual bitcoin mining rate at that time.

The dollar printing activity of the FED is totally dependent on future monetary policy.


Imho it makes no sense to measure Bitcoin deflation/inflation in relation to USD or any other state-controlled currency. Better use wheat, sugar, milk, or precious metals.

notig
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April 10, 2013, 03:22:45 AM
 #4

would it also be + the GDP too?

(in this case I mean GDP as far as what's inside the bitcoin economy)

if the GDP increases by 3 % and dollars inflate by 3% then bitcoin would have to deflate by 6% right?
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April 10, 2013, 03:24:05 AM
 #5

Bitcoin is inflationary.  The Bitcoin money supply is growing at about 12% annually.  That will drop to ~5% by the next block halving and 2% by the following one and then <1% by 2024. 
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April 10, 2013, 05:27:38 AM
 #6

would it also be + the GDP too?

(in this case I mean GDP as far as what's inside the bitcoin economy)

if the GDP increases by 3 % and dollars inflate by 3% then bitcoin would have to deflate by 6% right?

I agree.
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April 10, 2013, 05:55:19 AM
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The market's time value of money adjusted for the bitcoin creation rate.

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April 10, 2013, 06:14:58 AM
 #8

the annual rate of deflation?

I guess I should clarify: In relation to the dollar. Obviously the dollar inflates at least 3 % or something per year. So that means bitcoin would appear to at least deflate 3% per year (not including growth) right?

Price deflation and currency appreciation are not the same thing. According to standard academic reasoning in finance, the stronger currency (bitcoin) should appreciate at a rate centered on the difference of their inflation rates. The inflation rate in bitcoin, even when it has reached equilibrium, will usually be negative. So there isn't enough information in your post to answer, even theoretically.

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April 10, 2013, 10:22:48 AM
 #9

Bitcoin will not stabilize until it consumes the whole global economy. Dollar price will become irrelevant before that moment: people would dump dollars en masse when BTC is in hands of 1% of all people.

Not quite. People on aggregate are short dollars (via dollar denominated debt, mostly mortgages, as well as consumer debt and margin debt). Total private debt dwarfs the money supply, and this debt is being slowly repaid (or defaulted). This need for repayment creates demand for US$, which means that people simply can't "dump dollars en masse", they don't even have the option.

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TimJBenham
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April 12, 2013, 04:04:15 PM
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Bitcoin will not stabilize until it consumes the whole global economy. Dollar price will become irrelevant before that moment: people would dump dollars en masse when BTC is in hands of 1% of all people.

Not quite. People on aggregate are short dollars (via dollar denominated debt, mostly mortgages, as well as consumer debt and margin debt). Total private debt dwarfs the money supply, and this debt is being slowly repaid (or defaulted). This need for repayment creates demand for US$, which means that people simply can't "dump dollars en masse", they don't even have the option.

True but maybe the BTC/USD will be so high by then I will be able to payoff my mortgage with one of my minimum wage BTC pay checks!

You are a warlord in the outskirts of the known world struggling to establish a kingdom in the wild lands.
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April 23, 2013, 08:50:42 PM
 #11

Bitcoin will not stabilize until it consumes the whole global economy. Dollar price will become irrelevant before that moment: people would dump dollars en masse when BTC is in hands of 1% of all people.

Not quite. People on aggregate are short dollars (via dollar denominated debt, mostly mortgages, as well as consumer debt and margin debt). Total private debt dwarfs the money supply, and this debt is being slowly repaid (or defaulted). This need for repayment creates demand for US$, which means that people simply can't "dump dollars en masse", they don't even have the option.

True but maybe the BTC/USD will be so high by then I will be able to payoff my mortgage with one of my minimum wage BTC pay checks!
So you are confirming what I said. You (like millions others) are short $, and you are looking for an opportunity to pay back your $ debt. You hope that the assets you bought with your borrowed $ (including your house and bitcoins) will appreciate in value (measured in $) so that you will pay back your debt. You won't "dump dollars" as you've already done it (you are short), if anything you are a future source of DEMAND for dollars.

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TimJBenham
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April 23, 2013, 11:39:56 PM
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True but maybe the BTC/USD will be so high by then I will be able to payoff my mortgage with one of my minimum wage BTC pay checks!
So you are confirming what I said. You (like millions others) are short $, and you are looking for an opportunity to pay back your $ debt. You hope that the assets you bought with your borrowed $ (including your house and bitcoins) will appreciate in value (measured in $) so that you will pay back your debt. You won't "dump dollars" as you've already done it (you are short), if anything you are a future source of DEMAND for dollars.

It was a joke, theta. Lighten up.

I don't see how the "people" can be short dollars. Dollars are implicit claims on the sovereign, so the sovereign is short dollars and everyone else therefore has to be net long.

You are a warlord in the outskirts of the known world struggling to establish a kingdom in the wild lands.
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April 24, 2013, 12:13:59 AM
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I don't think it'll ever stabilize. But, when all the coins are mined and it's well-known, it should stop fluctuating so intensely and rapidly.
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May 05, 2013, 09:03:02 AM
 #14

True but maybe the BTC/USD will be so high by then I will be able to payoff my mortgage with one of my minimum wage BTC pay checks!
So you are confirming what I said. You (like millions others) are short $, and you are looking for an opportunity to pay back your $ debt. You hope that the assets you bought with your borrowed $ (including your house and bitcoins) will appreciate in value (measured in $) so that you will pay back your debt. You won't "dump dollars" as you've already done it (you are short), if anything you are a future source of DEMAND for dollars.

It was a joke, theta. Lighten up.

I don't see how the "people" can be short dollars. Dollars are implicit claims on the sovereign, so the sovereign is short dollars and everyone else therefore has to be net long.

 hmm,  sorry,  I do need to lighten up I guess Smiley

 true,  everyone else is net long dollars.  Everyone else is broken down to the private sector (households and businesses) and the forum sector (private individuals but also sovereigns). In the US'  case,  as the persistent  trade deficit suggests, it's the foreign sector that is very long dollars.  Mainly Asian countries (net exporters to the US).  The domestic private sector is net short  dollars.

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May 06, 2013, 08:19:23 PM
 #15

the annual rate of deflation?

I guess I should clarify: In relation to the dollar. Obviously the dollar inflates at least 3 % or something per year. So that means bitcoin would appear to at least deflate 3% per year (not including growth) right?

Inflation is at least ~4.5-6%, the CPI is highly inaccurate: It's excludes food and energy and uses other such dishonest tactics.



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