Uncapped coin vs capped coin supply

[sidhujag]

I'm trying to reach out to those who believe btc or crypto currency may be used to replace our medium of exchange (USDX or other fiat).

Obvious Fact: USDX used to be backed by gold (physical unit with a supply cap unknown).
Obvious Fact: USDX is now unlimited with no backing, and chart shows purchasing power dwindling
Obvious Fact: BTC is not backed by a physical commodity but by a known physical limit of 21 million coins.

Theory: BTC will replace USDX as it becomes mainstream.

My thread isn't meant to discuss why those facts exist/why that theory exists or if it can change, I merely want to know about the fact that BTC is capped, while other Alt's mainly DVC is not capped.

Anyone smart enough to know why a capped coin would be better long term than an uncapped coin?

BTC wants to preserve intrinsic value by creating a supply cap at 21 million at which point you will have to start dividing your btc units, velocity of money cannot decrease drastically or there is a recession. This is an obvious conclusion as to what has to happen at 21 million.

At this point I will introduce:

Obvious Fact: Population growth is not capped
Obvious Fact: More people on earth means more demand for natural resources as basic necessities, and as a result more currency in circulation has to supply the demand for these resources.

Speaking to some people it seems as though the proponents of BTC, who understand that as population grows the demand for currency grows,  have this theory that they think is valid:

Theory: At the 21 million cap of BTC dividing the BTC into units as population grows will solve the problem of supply

I think this is totally a unfounded conclusion and would like to have an explanation as to why they think this theory is valid? Namely how does the demand/supply curve link to the notion of dividing BTC into smaller units.

What makes total sense to me is a controlled supply with no cap, a controlled supply would grow as population grows to provide supply as demand increases. Thus my theory:

Theory 1: Devcoin or other uncapped Alt's would provide the security of a hashed network at the same time provide supply as population grows, creating a balance between inflationary and deflationary economic pressures.

Theory 2: Devcoin or an uncapped Alt, would provide an equilibrium at which the demand/supply curve wouldn't adversely affect the price of a resource like BTC would in the long term (BTC Cap limit).

One would have to question the growth rate of the Alt and ask if it is too fast/too slow, or does it matter? Population is growing exponentially and this is why USDx is allowed to go off gold standard which hindered economic expansion, thus higher quality of life at the expense of purchasing power long term. (wages housing prices increase at the other end of the spectrum to create a balance).

If we were to get off our usd standard and move to crypto's it seems to me that an Alt with uncapped supply is the way to go?

I only refer to Devcoin because it is the oldest Alt I know of that is uncapped, it almost as old as BTC as far as I understand it. I'm sure the other benefits of open source community support is a different issue and may or may not decide if this coin or another uncapped coin will be the one to survive long term, but not sure why BTC would survive over one of these.

Discuss below...

Thanks
Jag

[Elwar]

100 BTC could take care of the full money supply of an entire country if it got popular enough. Easily.

[sidhujag]

100 BTC could take care of the full money supply of an entire country if it got popular enough. Easily.

Please give a thoughtful answer, you did not answer what would happen after btc supply stopped expanding, yes price would rise, btc would become divisible and only a few would have whole btc. What stops the economy from becoming lopsidedly deflationary?

[Dekshuduph]

100 BTC could take care of the full money supply of an entire country if it got popular enough. Easily.

Please give a thoughtful answer, you did not answer what would happen after btc supply stopped expanding, yes price would rise, btc would become divisible and only a few would have whole btc. What stops the economy from becoming lopsidedly deflationary?

We don't need to stop that. Seeing as we'll hit the cap over a hundred years in the future, likely by then Gaven will have put in a change to sort this problem out(ex. adding 8 more decimal places) or Bitcoin will be overthrown and replaced with something better. Hey, will any of us live to see a single Satoshi having accountable value?

[sidhujag]

100 BTC could take care of the full money supply of an entire country if it got popular enough. Easily.

Please give a thoughtful answer, you did not answer what would happen after btc supply stopped expanding, yes price would rise, btc would become divisible and only a few would have whole btc. What stops the economy from becoming lopsidedly deflationary?

We don't need to stop that. Seeing as we'll hit the cap over a hundred years in the future, likely by then Gaven will have put in a change to sort this problem out(ex. adding 8 more decimal places) or Bitcoin will be overthrown and replaced with something better. Hey, will any of us live to see a single Satoshi having accountable value?

This is what I don't get from the general proponents of BTC why do you think adding more decimal places will solve the problem? That is not increasing supply. This will have no effect on fixing the issue. It's like saying I want to buy an apple with $1 usd, but it will be cheaper if i use miniUsd which is $0.5 usd instead. Seems as though everyone is on the same page by saying hey we will just add more decimal places, yet I have not had a simple explanation as to how this would solve the problem. Think of the demand supply curve.

[wolverine.ks]

population is not capped? that has yet to be proven.

when 21 million is reached velocity slows down? that has yet to be proven.

additionally, you could measure velocity in terms of bitcoin or in terms of real wealth. which one you choose will probably change your results.

what it means exactly to be backed by something is still up for debate.

as far as deflationary pressures, it prevents wasteful spending, increases the rate of innovation of a society, stabilizes the business cycle if not completely eliminates it, it rewards intelligent uses of resources and punishes the inverse, it prevents centralized and biased dispersing of newly created money. what's not to love?

additionally, something can be infinitely deflationary, however, since the price of a good or service that has value cannot reach 0 in price regardless of how valuable your currency is, then there is a asymptotical approach to the deflation. it may continue forever, but it will eventually slow to imperceptible changes.

[Dekshuduph]

This is what I don't get from the general proponents of BTC why do you think adding more decimal places will solve the problem? That is not increasing supply. This will have no effect on fixing the issue. It's like saying I want to buy an apple with $1 usd, but it will be cheaper if i use miniUsd which is $0.5 usd instead. Seems as though everyone is on the same page by saying hey we will just add more decimal places, yet I have not had a simple explanation as to how this would solve the problem. Think of the demand supply curve.

If you wanted to buy that apple with a miniUSD, you couldn't, you'd have to pay two miniUSD.

My point being we'd begin referring to the Bitcoin as mBTC and uBTC because it'll be too inconvenient to say BTC as there'd be too many decimal places. That doesn't change the fact that a mBTC is worth as much as one thousand BTC. Something you could buy for one BTC could be paid for with one BTC or a thousand mBTC, depending on the way you look at it. Unless someone's a gullible stooge, you wouldn't be buying that for the wrong price.

[sidhujag]

population is not capped? that has yet to be proven.

when 21 million is reached velocity slows down? that has yet to be proven.

additionally, you could measure velocity in terms of bitcoin or in terms of real wealth. which one you choose will probably change your results.

what it means exactly to be backed by something is still up for debate.

as far as deflationary pressures, it prevents wasteful spending, increases the rate of innovation of a society, stabilizes the business cycle if not completely eliminates it, it rewards intelligent uses of resources and punishes the inverse, it prevents centralized and biased dispersing of newly created money. what's not to love?

additionally, something can be infinitely deflationary, however, since the price of a good or service that has value cannot reach 0 in price regardless of how valuable your currency is, then there is a asymptotical approach to the deflation. it may continue forever, but it will eventually slow to imperceptible changes.

Deflationary pressures increase innovation, in what universe? It would increase the amount of cheap bastards there are out there by 1 million folds for sure Deflation is its uses and you need a bit of both, but to say that its better to sit on one side or the other you can't so for sure, all we know is we need a balance of both, as it has been working so far. I can't say what the future will look like to know if deflation would solve all of our problems in finance, but I'm confident it won't.

We know that as people stop spending or park their money because of deflationary pressures, economic contraction will surely ensue. How do you get people to spend anything other than what is needed or what they are comfortable with? How do you get ppl to try new things to spark interest and possible innovative ideas for future generations?

One thing I agree is that it prevents wasteful spending, yes, but hyper deflation would lead to no spending at all. hyper is what you get at 21 million because at that point we can see that the supply of coins stops yet real growth and demand for them don't.

I can see how btc proponents can think that as btc becomes divisible and say a new decimal place is placed, yet btc becomes 10x more valuable, that now you have new supply that didn't exist before for people who can only afford the btc with the new decimal extended. However this is still highly deflationary and doesn't solve the problems societies have with deflationary pressures. Maybe a breakthrough is needed but it may end up going back to human psychology which we know is unlikely to change as fast as we need it to.

Real wealth not measured in btc? I thought that at this point your assets would be valued in the crypto currency of choice?

[Gabi]

So you are about "deflation is bad" am i right? 

[sidhujag]

This is what I don't get from the general proponents of BTC why do you think adding more decimal places will solve the problem? That is not increasing supply. This will have no effect on fixing the issue. It's like saying I want to buy an apple with $1 usd, but it will be cheaper if i use miniUsd which is $0.5 usd instead. Seems as though everyone is on the same page by saying hey we will just add more decimal places, yet I have not had a simple explanation as to how this would solve the problem. Think of the demand supply curve.

If you wanted to buy that apple with a miniUSD, you couldn't, you'd have to pay two miniUSD.

My point being we'd begin referring to the Bitcoin as mBTC and uBTC because it'll be too inconvenient to say BTC as there'd be too many decimal places. That doesn't change the fact that a mBTC is worth as much as one thousand BTC. Something you could buy for one BTC could be paid for with one BTC or a thousand mBTC, depending on the way you look at it. Unless someone's a gullible stooge, you wouldn't be buying that for the wrong price.

Your point is taken on the psychological affects of using mBTC or uBTC and that is not really the issue here. Wolverine actaully made a good point in that deflation is always a good thing as it rewards those to innovate to eliminate waste, but we've seen from the past that deflation can lead to a halt in spending and either we would need to go all out, go through a bad recession and force people to look in the mirror, or we adapt our current situation to use something like DVC and slowly move towards a purely deflationary-hybrid scheme.

I'll make it more clear for you using our example of the apple and btc.

At 21 million the apple costs a certain amount. Now there are more and more people fighting for the same apple as population grows. Since there are no more coins available we divide them up as things become "cheaper"... the incentive is the hold money as it grows in value and then spend when you "need" to. That will drive the cost of the apple down to uBTC numbers from mBTC numbers. The Apple farmer wants to get more BTC so he innovates new ideas to make his apple grow cheaper yet doesn't sacrifice quality otherwise people won't buy from him at all. However, it is to be seen to see if this is feasible as my argument was that this may be well on paper but practically breaks down when spending grinds to a halt and noone will buy the apple, they will sacrifice to hold off until the apple farmer goes out of business and shuts down. There is a competitive cycle of driving prices down to a poitn where it is always less and less profit to build the same thing, and you will have less and less people willing to take risks to provide service to the industry whereas you can just hold your money and gain more "wealth". See where I'm going with this?

On the other end of the spectrum, as more people want the apple the price should go up, while more people need coin to buy it and thus the price drops back down, equalizing as population(demand) grows for both currency and product. The key is the incentive of what to do with the money and where to spend. Yes the apple price may be fixed in terms of btc but what about investment, innovation, wealth? Will people want to create a service when profits are minimized to a point where it may not be a benefit in becoming an apple farmer for some length of time? Why not just work 9-5 and save up as money becomes worth moreand more, but then who's offering you your job, what incentive do they have to keep offering you work? If noone works how can we put food on the table? What is the true price of the apple?

[sidhujag]

So you are about "deflation is bad" am i right?  

Not sure if its good or bad, its just "different" than how we work today. Have we actually seen it work? Remember human phscyology cannot be assumed to "change" or adapt because we know that will not happen as fast as we need it to.

[Gabi]

Have we actually seen it work?

Yup, for thousands of year the world ran on gold, wich cannot be printed at will and whose supply is limited (sure, supply cap is "unknown" but guess what, you can't just print gold at will)

[sidhujag]

Have we actually seen it work?

Yup, for thousands of year the world ran on gold, wich cannot be printed at will and whose supply is limited (sure, supply cap is "unknown" but guess what, you can't just print gold at will)

Yes but we never reached the total supply did we? What happened when we realized that we had a finite supply of gold? We went off of it. Good or bad thing? I don't know but we did increase quality of life since gold standard days no?

What would happen if we mined all the gold and we were on the gold standard? Maybe that's what we averted by going to no backing.

What we did realize was that we needed more money based on our population growth, and that got perturbed into capitalism 2.0 where big corporations misused the need for money growth based on balance sheet expansion.  The system is fine minus the big corporations who do not offer much value or innovation but own a bigger percentage of our monetary base than they should.

Alot of the wealth gets created by the market and trading for speculative purposes which does not provide and innovation, just misplacement of currency. This should be banned in my oppinion and it is the wrong incentive to earn $$. IE: Hedge fund places a trade on the lumber futures market based on a mill with x amount of surplus inventory. That trade is backed by inventory, and the guy next door who also owns a fund, learn of this and bids up the market so that when hedge fund A buys he will buy higher, providing profit for fund B. Fund B should not be allowed to trade unless there is someone with the inventory who wants or needs to hedge his position in the market due to external circumstances. That was the true intent of the futures market and we allowed speculation for the sake of liquidity to ruin the market.

[Dekshuduph]

Your point is taken on the psychological affects of using mBTC or uBTC and that is not really the issue here. Wolverine actaully made a good point in that deflation is always a good thing as it rewards those to innovate to eliminate waste, but we've seen from the past that deflation can lead to a halt in spending and either we would need to go all out, go through a bad recession and force people to look in the mirror, or we adapt our current situation to use something like DVC and slowly move towards a purely deflationary-hybrid scheme.

I'll make it more clear for you using our example of the apple and btc.

At 21 million the apple costs a certain amount. Now there are more and more people fighting for the same apple as population grows. Since there are no more coins available we divide them up as things become "cheaper"... the incentive is the hold money as it grows in value and then spend when you "need" to. That will drive the cost of the apple down to uBTC numbers from mBTC numbers. The Apple farmer wants to get more BTC so he innovates new ideas to make his apple grow cheaper yet doesn't sacrifice quality otherwise people won't buy from him at all. However, it is to be seen to see if this is feasible as my argument was that this may be well on paper but practically breaks down when spending grinds to a halt and noone will buy the apple, they will sacrifice to hold off until the apple farmer goes out of business and shuts down. There is a competitive cycle of driving prices down to a poitn where it is always less and less profit to build the same thing, and you will have less and less people willing to take risks to provide service to the industry whereas you can just hold your money and gain more "wealth". See where I'm going with this?

Yeah, I see where you're coming from. I understand this, and I'll change my stance. Let's bring up my point again with time: this will happen in over a hundred years. The main goal of Bitcoin is to overthrow fiat money. Now, going on the assumption that we are successful in this endeavor, Bitcoin could be a main currency for at least one country. If it begins to deflate rapidly, then although the apple farmer will want to charge less for his product, the resources he requires will begin to cost less aswell. Also, if Bitcoin is the only way you can buy an apple in some situations, farmers are going to want to up the price so they can get a more reasonable profit, and people are going to have to pay the higher price because of this. Technically this would make deflation and inflation into equilibrium, since there's always going to be an equal amount of Bitcoin. Yes, depending on population it will continue deflating anyways, but I don't think it will be as drastic as you're making it out to be.

You may be thinking that the economy will deflate rapidly due to the deflation trend it's going through now. If we were to hit the limit now, you'd be right, and then Bitcoin would become primarily an investment. However as long as the price keeps going up, people are going to begin to sell their bitcoins to get their profit before the drop in price that would come as soon as really anyone with a huge investment does just this. Everyone's going to sell their bitcoins for fiat and it will become worth nothing, essentially killing the system.

21 million bitcoins is a very high cap. Whether fiat currency has been overthrown will determine if Bitcoin will remain successful when the cap is reached.

[sidhujag]

Your point is taken on the psychological affects of using mBTC or uBTC and that is not really the issue here. Wolverine actaully made a good point in that deflation is always a good thing as it rewards those to innovate to eliminate waste, but we've seen from the past that deflation can lead to a halt in spending and either we would need to go all out, go through a bad recession and force people to look in the mirror, or we adapt our current situation to use something like DVC and slowly move towards a purely deflationary-hybrid scheme.

I'll make it more clear for you using our example of the apple and btc.

At 21 million the apple costs a certain amount. Now there are more and more people fighting for the same apple as population grows. Since there are no more coins available we divide them up as things become "cheaper"... the incentive is the hold money as it grows in value and then spend when you "need" to. That will drive the cost of the apple down to uBTC numbers from mBTC numbers. The Apple farmer wants to get more BTC so he innovates new ideas to make his apple grow cheaper yet doesn't sacrifice quality otherwise people won't buy from him at all. However, it is to be seen to see if this is feasible as my argument was that this may be well on paper but practically breaks down when spending grinds to a halt and noone will buy the apple, they will sacrifice to hold off until the apple farmer goes out of business and shuts down. There is a competitive cycle of driving prices down to a poitn where it is always less and less profit to build the same thing, and you will have less and less people willing to take risks to provide service to the industry whereas you can just hold your money and gain more "wealth". See where I'm going with this?

Yeah, I see where you're coming from. I understand this, and I'll change my stance. Let's bring up my point again with time: this will happen in over a hundred years. The main goal of Bitcoin is to overthrow fiat money. Now, going on the assumption that we are successful in this endeavor, Bitcoin could be a main currency for at least one country. If it begins to deflate rapidly, then although the apple farmer will want to charge less for his product, the resources he requires will begin to cost less aswell. Also, if Bitcoin is the only way you can buy an apple in some situations, farmers are going to want to up the price so they can get a more reasonable profit, and people are going to have to pay the higher price because of this. Technically this would make deflation and inflation into equilibrium, since there's always going to be an equal amount of Bitcoin. Yes, depending on population it will continue deflating anyways, but I don't think it will be as drastic as you're making it out to be.

You may be thinking that the economy will deflate rapidly due to the deflation trend it's going through now. If we were to hit the limit now, you'd be right, and then Bitcoin would become primarily an investment. However as long as the price keeps going up, people are going to begin to sell their bitcoins to get their profit before the drop in price that would come as soon as really anyone with a huge investment does just this. Everyone's going to sell their bitcoins for fiat and it will become worth nothing, essentially killing the system.

21 million bitcoins is a very high cap. Whether fiat currency has been overthrown will determine if Bitcoin will remain successful when the cap is reached.

This is what I hoped to see from you, good points! Yes there may be some sort of equilibrium once deflation hits because it may be a 0 sum game (never though of this)... however resources we know are not 0 sum for out intents and purposes, they will always seem like they are in abundance until we learn that we only have so much left (oil, water). The system needs to be able to cope with this in some way, and I'm not sure which method will help with this regard and provide a more smooth transition between running out of the resource and being replaced through innovation or something.

Yes no backing at all is not the way to go because of the mess we are in now, but no a total hard cap is also just as bad, this is why i'm a proponent of a no cap but controlled supply increase which will fight deflation issues but not introduce the same inflation problems. In 100 years there will be something like 200 billion dvc? compared to 21 million btc? Does it matter, in 100 years alot of things will have changed, and we have far more usd in our system than dvc would at that point, so the fact that it is uncapped should not hinder the viability of adaption as a medium of exchange. Infact I would say it would provide smoother responses to external pressures that we do not control, and a more stable currency rate over the long term.

[Dekshuduph]

This is what I hoped to see from you, good points! Yes there may be some sort of equilibrium once deflation hits because it may be a 0 sum game (never though of this)... however resources we know are not 0 sum for out intents and purposes, they will always seem like they are in abundance until we learn that we only have so much left (oil, water). The system needs to be able to cope with this in some way, and I'm not sure which method will help with this regard and provide a more smooth transition between running out of the resource and being replaced through innovation or something.

Yes no backing at all is not the way to go because of the mess we are in now, but no a total hard cap is also just as bad, this is why i'm a proponent of a no cap but controlled supply increase which will fight deflation issues but not introduce the same inflation problems. In 100 years there will be something like 200 billion dvc? compared to 21 million btc? Does it matter, in 100 years alot of things will have changed, and we have far more usd in our system than dvc would at that point, so the fact that it is uncapped should not hinder the viability of adaption as a medium of exchange. Infact I would say it would provide smoother responses to external pressures that we do not control, and a more stable currency rate over the long term.

I honestly do not like to think of other currencies that will run alongside Bitcoin or any other currency that may take control, because honestly they're more like an investment as Bitcoin is compared to USD right now. DVC I think would become too inflationary to incorporate into the situation.

I'll bring back my point that, yes, in a hundred years things will have changed. I hope that Gaven implements a system that tapers off the Bitcoin supply reward to miners the closer we reach the cap. This would remove the hyper-deflation problem altogether. Inflation is evil, taking peoples' money away to provide fluidity is immoral.

I've got nothing more to input, so I guess just keep the discussion going while I attempt to understand terms like "0 sum" and "deflation issues."

[bitzox]

ok, you're trying to argue some of the finer points of economic theory without a basic understanding of the economic knowledge that underpins said argument. For example your assumption about why we went off the gold standard is 100% wrong, it had 0 to do with a finite supply of gold and everything to do with competitive currency devaluation and the funding of an unpopular war in Vietnam. For reference see this for the short version

https://en.wikipedia.org/wiki/Nixon_Shock

Or this for the more complete coverage

https://en.wikipedia.org/wiki/Bretton_Woods_system

Also if you think that we didn't realize their was a finite supply of gold until the 20th century you are seriously insulting the intelligence of everyone who lived from the Renascence (and probably before that) until 1971 when the gold standard was officially abandoned. In addition you must realize that the supply and demand for a medium of exchange is inherently different from the simple supply and demand curves discussed in most econ classes. Growth in population does not ipso facto mean an increase in demand for currency. Prevailing interest rates have a much bigger effect on the supply of money than population growth. This will be especially true as population growth stalls, which according to the UN will occur sometime in the 22nd century at around 10 billion people. The capacity for population growth is not unlimited, thus invalidating this "obvious fact:"

Obvious Fact: Population growth is not capped

As to the argument that deflation promotes hoarding and stifles economic growth and innovation, you are partially right but your logic in getting the the almost correct conclusion is faulty. My first counter example is any kind of electronic you have ever purchased in your entire life. You knew with 100% certainty that if you waited a year you could get the same performance for cheaper or better performance for the same price. Yet at some point you decided to go ahead and buy said electronic. This is a perfect example of what would happen in a truly deflationary economy, it promotes responsible consumption, rather than rampant conspicuous consumption promoted by our current economic model.

This is 100% a good thing for humanity and society as a whole. Just as the total supply of bitcoins is limited, the total sum of all natural resources is limited. You cannot have economic growth in the 5-6% range every year going forward to infinity. Their are limiting constraints (land area, oil, minerals, water, etc) that will impose upper limits on our consumption. I cannot stress this point enough, a money supply that is allowed to grow infinitely will eventually destroy itself as natural resources are not infinite.

On to the divisibility of bitcoin. Many deflationary economies ran into trouble because the medium of exchange was not fungible enough. As deflation occurs and prices fall, things eventually should be priced below the smallest possible denomination. Bitcoin solves this problem by being essentially infinity divisible (obviously its not truly infinite but for the purposes of this discussion we can assume that it is). This means that no matter how far prices fall bitcoin can adjust so that no product or service becomes to cheap to purchase. For example int he US you cannot buy something that costs .5 cents with cash, you need to buy do or make the transfer electronically, bitcoin avoids this problem entirely.

This completely invalidates your "obvious fact":

Obvious Fact: More people on earth means more demand for natural resources as basic necessities, and as a result more currency in circulation has to supply the demand for these resources.

In fact more currency coming in to circulation simply devalues all currency currently held in circulation, it does nothing to "supply the demand for these resources" a quote I cant make any sense out of. (To avoid future misunderstandings I suggest you replace the blanket terms supply and demand with more specific terminology, especially when taking about multiple supply demand curves). I think here you are trying to say that as demand for natural resources increases (while supply of NR stays constant) the supply of currency needs to increase if we want to keep the price of said natural resources consistent. If the supply of currency is constant while demand increases the price of said currency will rise meaning the price of said natural resources will decrease (currency is more valuable so you can buy more with it).

So instead of increasing the supply of currency in a futile attempt to maintain prices why not let prices fall as the value of money increases? This dovetails nicely into a discusses of innovation. You talk about profits being squeezed out so people would be less likely to pursue innovation. Because bitcoin is infinitely dividable we never have to worry about profits going to 0, as we can just divide the currency into smaller and smaller denominations. At the same time the price of goods is going down. Would you be willing to risk money to make a 1 Satoshi profit per product sold today? of course not. But would someone 100 years from now be willing to do it when a Satoshi is enough o feed a family for a year? Of course.

Their are numerous examples in history of deflationary economies succeeding, they are just ignored by Keynesian economic thinkers, which is why you probably have never heard of them. Scottish Free banking in the 18th and 19th centuries come first and foremost to my mind. The Mystery of Banking by Murry Rothbard has some great examples of how deflationary economies can work and how inflationary ones are doomed to failure by definition(as well as a host of other interesting topics). He does a much better job of explaining why in great detail so if you don't believe my brief and incomplete treatise on the subject I would suggest you read it.

I know I probably didn't address all of your points or concerns but I think this is a good starting point.

TL:DR Population growth is capped by natural resources, an infinity divisible deflationary currency allows for innovation through lower prices. People will accept lower wages because prices are lower. Supply and demand for a medium of exchange cannot be equated to supply and demand for a good or service. Read stuff by Murry Rothbard

[bitcoinbear]

100 BTC could take care of the full money supply of an entire country if it got popular enough. Easily.

Please give a thoughtful answer, you did not answer what would happen after btc supply stopped expanding, yes price would rise, btc would become divisible and only a few would have whole btc. What stops the economy from becoming lopsidedly deflationary?

We don't need to stop that. Seeing as we'll hit the cap over a hundred years in the future, likely by then Gaven will have put in a change to sort this problem out(ex. adding 8 more decimal places) or Bitcoin will be overthrown and replaced with something better. Hey, will any of us live to see a single Satoshi having accountable value?

This is what I don't get from the general proponents of BTC why do you think adding more decimal places will solve the problem? That is not increasing supply. This will have no effect on fixing the issue. It's like saying I want to buy an apple with $1 usd, but it will be cheaper if i use miniUsd which is $0.5 usd instead. Seems as though everyone is on the same page by saying hey we will just add more decimal places, yet I have not had a simple explanation as to how this would solve the problem. Think of the demand supply curve.

Nobody complains about million dollars being too expensive. They just use dollars instead.

If the price of bitcoins goes up to 1000000 dollars, only idiots will complain that they are too expensive, the rest of us will just price things in uB (microbits) instead.

I don't think you have clearly defined what "the problem" is. The divisibility of bitcoins solves the granularity problem that would happen if bitcoins were deflationary but not divisible. Sort of like what has happened with gold - try going to a store and buying an apple with gold, what are you going to do give the clerk a couple flecks?

The underlying "problem" of having a deflationary currency is unrelated to the divisibility issue. Look through these forums, there are plenty of discussions on why deflation is not necessarily a problem.

[bitzox]

The underlying "problem" of having a deflationary currency is unrelated to the divisibility issue. Look through these forums, there are plenty of discussions on why deflation is not necessarily a problem.

This is the crux of it I think.

[Dekshuduph]

Checks on topic again

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