Bitcoin deflation

[JamesTaylor]

I'm serious worried about bitcoin deflation and can not find proper information. I know there's very well documented people in the forum and I would appreciate some comments on this topic.

If bitcoin price is going to go up (given it's finite) why should I buy things if I can hold the coins and be richer tomorrow?

Holding vs Spending

[TippingPoint]

Everything in moderation.

[kjj]

You can't possibly have searched for this.  I'd be amazed if there were less than 100 threads on this topic, many of which include "deflation" right in the title.

Basically, commerce happens between present values.  You buy something using bitcoin when your present value of the something (which includes your own expectations of future value) is greater than your present value of the bitcoin you are spending (which inclues your own expectations of future value).

If you don't believe that...  You currently possess some dollars (or whatever your local currency is).  Those dollars (or whatever) are inflationary.  They are worth now less than they were yesterday, and they will be worth even less tomorrow.  Why do you hold them, when everything else is gaining in value relative to them?

[JamesTaylor]

Thanks kjj. I looked for the information in the measure that I could. I surely did not go through every topic in the forum but still it wasn't very clear.

So you say people commerce because they thing the value (including expectations of value etc..) is higher? Maybe when people (talking about majorities) buy things they do it for obligation or other reasons, not to get a profit (I get it's not only economical).

Whatever, I don't want to be that 101 tiring post on the recurring topic, I guess I'll have to research a bit more by myself. Thanks anyway.

[kjj]

Do you really think that anyone would starve because they figured their money would buy more food when they are dead?  How about let their mortgage go into default because their money would be worth more after they are homeless?  We can extrapolate these extreme examples down into more reasonable conditions and it will be obvious that trade will always happen.

Deflation in bitcoin will be both less severe and more predictable than the inflation that every currency in the world is experiencing today.  And again, no one imagines that commerce will grind to a halt as people refuse to accept dollars for their goods, even though their dollars are losing value.

[worldinacoin]

Excess of Deflation and Inflation will not be good for anyone, though a slight bias towards Inflation is good for the growth of an economy.   Deflation in Bitcoin will be bad for the use as a currency esp the tremendous increase from say $5 to $200 before it is settling down at the current price levels.   A 40X deflation will just make people hesitant to even use Bitcoin as a means of trading, rather keeping it as the value will be far more. Hopefully Bitcoin prices will remain more or less stable to facilitate its use mainstream.  As a whole, Bitcoin is meant to be deflationary, but a bit of deflation won't hurt, similarly a bit of inflation does have its uses.

[Peter Lambert]

Go to Economics subforum. Look at the top of the list, there are two stickied threads about deflation. Read them please.

Nobody knows if the price will go up tomorrow. Bitcoins are currently inflating at over 10% per year. The price could slide down to 0 if nobody wants any bitcoins.

[kjj]

I hope you don't take it personally that I'm using your post to demonstrate the pathetic level of economic debate on the internet.  Many of us have seen posts nearly identical to this one over and over again.  I can't speak for anyone else, but I personally wish that people would stop writing junk like this.

Excess of Deflation and Inflation will not be good for anyone,

This is circular.  Excess implies bad, and [bad]X is not good.

though a slight bias towards Inflation is good for the growth of an economy. 

You cannot assume that anyone here will agree with this.  Many of us are interested in bitcoin because we suspect that this assertion is false.  (Note that an assertion is different from a conclusion.)

Deflation in Bitcoin will be bad for the use as a currency esp the tremendous increase from say $5 to $200 before it is settling down at the current price levels. 

No one has presented any evidence (as far as I'm aware) that the price action of the last few months has had a negative impact on bitcoin commerce.  The data that I've seen show bitcoin activity on an upward trajectory, nearly unrelated to the meandering of the exchange rate.

A 40X deflation will just make people hesitant to even use Bitcoin as a means of trading, rather keeping it as the value will be far more.

Essentially, this is the matter currently under discussion.  Asserting your side is not an argument.

Hopefully Bitcoin prices will remain more or less stable to facilitate its use mainstream.

This is a logical impossibility.  Mainstream adoption requires a dramatic increase in value.  It also confuses cause and effect, since the cause of the recent volatility is the low valuation of bitcoin.

As a whole, Bitcoin is meant to be deflationary, but a bit of deflation won't hurt, similarly a bit of inflation does have its uses.

No one that likes bitcoin is interested in hidden taxes.  We prefer that forced wealth distribution happen on TV, with guns drawn,  so that everyone can see what is really happening.  Thus, we reject inflation's "uses".

[worldinacoin]

I hope you don't take it personally that I'm using your post to demonstrate the pathetic level of economic debate on the internet.  Many of us have seen posts nearly identical to this one over and over again.  I can't speak for anyone else, but I personally wish that people would stop writing junk like this.

Excess of Deflation and Inflation will not be good for anyone,

This is circular.  Excess implies bad, and [bad]X is not good.

though a slight bias towards Inflation is good for the growth of an economy. 

You cannot assume that anyone here will agree with this.  Many of us are interested in bitcoin because we suspect that this assertion is false.  (Note that an assertion is different from a conclusion.)

Deflation in Bitcoin will be bad for the use as a currency esp the tremendous increase from say $5 to $200 before it is settling down at the current price levels. 

No one has presented any evidence (as far as I'm aware) that the price action of the last few months has had a negative impact on bitcoin commerce.  The data that I've seen show bitcoin activity on an upward trajectory, nearly unrelated to the meandering of the exchange rate.

A 40X deflation will just make people hesitant to even use Bitcoin as a means of trading, rather keeping it as the value will be far more.

Essentially, this is the matter currently under discussion.  Asserting your side is not an argument.

Hopefully Bitcoin prices will remain more or less stable to facilitate its use mainstream.

This is a logical impossibility.  Mainstream adoption requires a dramatic increase in value.  It also confuses cause and effect, since the cause of the recent volatility is the low valuation of bitcoin.

As a whole, Bitcoin is meant to be deflationary, but a bit of deflation won't hurt, similarly a bit of inflation does have its uses.

No one that likes bitcoin is interested in hidden taxes.  We prefer that forced wealth distribution happen on TV, with guns drawn,  so that everyone can see what is really happening.  Thus, we reject inflation's "uses".

No worries, to each his/her views.

[Impaler]

The velocity of BTC IS HORRIBLE, the total commerce in BTC per month is very likely less then the present valuation of a months worth of mining.  Coins probably get circulated once or twice EVER and then end up in someones hoard.  No one can deny that BTC circulates very very little and the vast majority is hoarded, the only argument is between people who think hoarding is good or bad.  The pro-hoard argument revolves around some idea that the holder of money has contributed capitol/value to society and this will find it's way into investments.  This argument is weak in the real world and obviously fallacious in BTC world ware the creation of BTC involves the destruction of valuable energy.

[jmutch]

As said one million times. BTC act much more like a commodity.

I believe something else will compliment BTC in the future. BTC being the gold to save, something else being the cash to spend.

[worldinacoin]

As said one million times. BTC act much more like a commodity.

I believe something else will compliment BTC in the future. BTC being the gold to save, something else being the cash to spend.

But why would anyone abandon the existing Gold/Silver etc for Bitcoin if it acts as a commodity only?

[jmutch]

As said one million times. BTC act much more like a commodity.

I believe something else will compliment BTC in the future. BTC being the gold to save, something else being the cash to spend.

But why would anyone abandon the existing Gold/Silver etc for Bitcoin if it acts as a commodity only?

Because all of the things BTC is good for: transferability, p2p, etc

You can't send a bar of gold to the other side of the world in 30mins
 
also never forget "lost coins". due to this the actual amount of circulatory BTC will be less than 21 million...

[Impaler]

As said one million times. BTC act much more like a commodity.

I believe something else will compliment BTC in the future. BTC being the gold to save, something else being the cash to spend.

But why would anyone abandon the existing Gold/Silver etc for Bitcoin if it acts as a commodity only?

Higher liquidity of course, the fact that cryptocurrency works over the internet at fast (but not instant) speeds is really their only advantage over physical commodities as they clearly how no intrinsic use value.  Regression theory that states things must have use value before they can be a medium of exchange, is clearly dis-proven by BTC and numerous other examples in online gaming.

[jmutch]

Gold has minimal intrinsic value. fait has zero intrinsic value unless you burn it. I don't intrinsic value has anything to do with this.

Things that are rare have value. things that the government says have value have value ie fiat.

I'm just saying BTC acts like a commodity because the minting schedule was designed to mimic the mining of gold. Deflation is designed into BTC.

[laissez]

If bitcoin price is going to go up (given it's finite) why should I buy things if I can hold the coins and be richer tomorrow?

Assuming there are vendors who are just as interested as you are in having bitcoins and believe they'll go up in value over time, that's all the more incentive they'll have for selling at a discount. They'd forego the current dollar price in the expectation that the bitcoins they receive will rise in value later on.

[bitzox]

I hope you don't take it personally that I'm using your post to demonstrate the pathetic level of economic debate on the internet.  Many of us have seen posts nearly identical to this one over and over again.  I can't speak for anyone else, but I personally wish that people would stop writing junk like this.

Excess of Deflation and Inflation will not be good for anyone,

This is circular.  Excess implies bad, and [bad]X is not good.

though a slight bias towards Inflation is good for the growth of an economy. 

You cannot assume that anyone here will agree with this.  Many of us are interested in bitcoin because we suspect that this assertion is false.  (Note that an assertion is different from a conclusion.)

Deflation in Bitcoin will be bad for the use as a currency esp the tremendous increase from say $5 to $200 before it is settling down at the current price levels. 

No one has presented any evidence (as far as I'm aware) that the price action of the last few months has had a negative impact on bitcoin commerce.  The data that I've seen show bitcoin activity on an upward trajectory, nearly unrelated to the meandering of the exchange rate.

A 40X deflation will just make people hesitant to even use Bitcoin as a means of trading, rather keeping it as the value will be far more.

Essentially, this is the matter currently under discussion.  Asserting your side is not an argument.

Hopefully Bitcoin prices will remain more or less stable to facilitate its use mainstream.

This is a logical impossibility.  Mainstream adoption requires a dramatic increase in value.  It also confuses cause and effect, since the cause of the recent volatility is the low valuation of bitcoin.

As a whole, Bitcoin is meant to be deflationary, but a bit of deflation won't hurt, similarly a bit of inflation does have its uses.

No one that likes bitcoin is interested in hidden taxes.  We prefer that forced wealth distribution happen on TV, with guns drawn,  so that everyone can see what is really happening.  Thus, we reject inflation's "uses".

Well said!

[TippingPoint]

I hope you don't take it personally that I'm using your post to demonstrate the pathetic level of economic debate on the internet.  

^^ This is a thing of great beauty and eloquence.

[Impaler]

I'm just saying BTC acts like a commodity because the minting schedule was designed to mimic the mining of gold. Deflation is designed into BTC.

BTC mining in no way what so ever resembles the mining of gold, this is one of the biggest pieces of misinformation in BTC, the mining schedule was designed to create a deflationary 'ratchet' which is achieved fantastically well, anyone who said it resembled gold mining was blowing smoke to cover the fact that early adopters would benefit from hugely from a system designed to be more deflationary then any commodity has ever been.  The actually gold production rate is GROWING, and it is estimated that more then half of all the gold ever mined has been mined in the last 50 years, this is the exact opposite of the pattern BTC established.  The total estimated production is 165,000 tons which is 66 years of present production.

[worldinacoin]

I'm just saying BTC acts like a commodity because the minting schedule was designed to mimic the mining of gold. Deflation is designed into BTC.

BTC mining in no way what so ever resembles the mining of gold, this is one of the biggest pieces of misinformation in BTC, the mining schedule was designed to create a deflationary 'ratchet' which is achieved fantastically well, anyone who said it resembled gold mining was blowing smoke to cover the fact that early adopters would benefit from hugely from a system designed to be more deflationary then any commodity has ever been.  The actually gold production rate is GROWING, and it is estimated that more then half of all the gold ever mined has been mined in the last 50 years, this is the exact opposite of the pattern BTC established.  The total estimated production is 165,000 tons which is 66 years of present production.

Thanks for the info, this is sure an interesting discussion.  Deeply appreciate all the members for sharing their experiences and knowledge.