How do you deal with deflation and the fixed number of bitcoins?

[thebitboy]

If you can't have a central bank that injects more money, how do you handle deflation?

[DannyHamilton]

If you can't have a central bank that injects more money, how do you handle deflation?

You don't "handle" it.  You simply accept it and live with it.

[mt_bird]

It will be interesting to see how this works out in the long term. Although there is an upper limit on the number of bitcoins, there can be a potentially unlimited number of alternate cryptocoins. So while bitcoin would be deflationary by itself, we could potentially see a form of inflation in which alternate cryptocurrencies become popular, causing bitcoin's fraction of the total cryptocurrency market to decline over time.

This all depends on the number of alternate cryptocoins that eventually become popular, which I don't think is possible to reliably predict. In ten years from now, we could have any of the following for example:

- Only bitcoin is popular.
- Only bitcoin and litecoin are popular.
- Bitcoin is still around but now only represents a small share of the cryptocurrency market.
- Bitcoin no longer exists and some other cryptocurrency(s) are used instead.
- Something else?

[Jos-T]

I'm pretty sure everyone is going to have a different opinion regarding this subject.

Mine is the following:
There is a thread in a different subforum which asks the question whether multiple crypto's can co-exist.
I think the answer to that question is heavily related and here's why.

It's just a matter of time before governments start regulating bitcoins or other crypto's for that matter.
"What can be taxed, will be taxed" has allways been there motto. Why would that change?
I think this will actually give bitcoin a better status as being the new gold and this will start the entire discussion of how to 'build' our society all over again.
If people would start using BTC for payments more and more, we are basicly back on the gold standard!
And if history repeats itself, something else (it was paper money, it will be paper money or a new inflationary crypto in the future) will be added and used to achieve the same situation as current.

Meaning the current situation of having gold as a mostly deflationary 'currency' while having inflationary fiat as a fuel for the economy will turn into
having BTC as the new gold and adding a new crypto which can and will be inflated...

Too stupid of an idea? It might be, but at the end of the day nobody knows and deflationary currencies have been tried in the past and have failed for a reason...

[thebitboy]

If you can't have a central bank that injects more money, how do you handle deflation?

You don't "handle" it.  You simply accept it and live with it.

I think I can rephrase my question. "How do you live with unstoppable deflation?"

[DannyHamilton]

If you can't have a central bank that injects more money, how do you handle deflation?

You don't "handle" it.  You simply accept it and live with it.

I think I can rephrase my question. "How do you live with unstoppable deflation?"

Far more happily than I would with unstoppable inflation.