Is BTC really a deflating currency or an inflating?

[viridisk]

Well, yeah, but it's basically the same as gold, which could, theoretically, all be lost in infinite amount of time.

But I doubt supply would halve every few years, as time passes and bitcoin is viewed more seriously, people will take more serious steps to protect their assets.

Besides, amount of mined ones will always remain the same. That's the actual theoretical supply. For day-to-day market purposes it is irrelevant are 1 million bitcoins lost into the void or hoarded by some random guy who use them as retirement fund.

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[Peter Lambert]

One thing many people here on bitcointalk ignore is that the money supply of bitcoin which increases and decreases during inflation/deflation is more complicated than just looking at blockexplorer.com and reading "Total BTC: 12.080M". What is actually important is the amount of money in circulation, for example if a large holder decides to start using his hoard then that will introduce inflationary pressure, conversely if somebody earning bitcoins starts saving everything he earns then that will introduce deflationary pressure.

Many people here also ignore credit bitcoins. Any time bitcoins are used in a fractional reserve depository way, or when lines of bitcoin credit are issued, that increases the monetary supply. You can argue all you want that those are not real bitcoins, but they really do affect the bitcoin economy.

[BitchicksHusband]

Its inflating until the last coin is minted.

Actually, it's deflating once the number of lost coins exceeds the number of mined coins.  Once the rewards get small enough, this can happen.

[ashaw596]

Its currently inflating, but it doesn't matter. Basic economics is that "known" inflation won't really have any real affect. People will account for it in their investments and purchases. In the long term its deflating as Bitcoins get lost. I can't say I quite like that its a deflationary currency :/.

[deisik]

Its inflating until the last coin is minted.

Actually, it's deflating once the number of lost coins exceeds the number of mined coins.  Once the rewards get small enough, this can happen.

How could you really assess the number of coins lost? Is there any way to even approximately estimate the rate of "normal wastage" of bitcoins? And could lost coins be retrieved somehow (say, in twenty years)?

[Roccker]

Hello - is this right:
25 Bitcoins are generated newly every 10 Minutes through mining.
That is 3600 Bitcoins per day.
That is 3 600 000 (3 million, sixhoundredthousand) new dollars (when 1 BC = 1000 dollars) that have to flow into Bitcoins daily (buying orders) just to keep the current price of a Bitcoin.
How does this compare to how much more dollars are created?

[kjj]

Hello - is this right:
25 Bitcoins are generated newly every 10 Minutes through mining.
That is 3600 Bitcoins per day.
That is 3 600 000 (3 million, sixhoundredthousand) new dollars (when 1 BC = 1000 dollars) that have to flow into Bitcoins daily (buying orders) just to keep the current price of a Bitcoin.
How does this compare to how much more dollars are created?

3.6 million dollars per day works out to ~110 million per month.  By contrast, QE is creating 83,000 million dollars per month.

For the record, I don't see what the mining rate has to do with flows in and out of the exchanges.

[Roccker]

3.6 million dollars per day works out to ~110 million per month.  By contrast, QE is creating 83,000 million dollars per month.
For the record, I don't see what the mining rate has to do with flows in and out of the exchanges.

Sorry, what is QE?

Is my math right with 110 million dollars per month - that worldwide, (assuming in this example that 1bc=1000 dollars) every month bitcoins have to be bought at 110 million dollars? Seems a cracy lot.

25 bitcoins are mined every 10 minutes, and these bitcoins are sold at some point. So to hold the price stable on average 25 bitcoins have to be sold every 10 minutes with new fiat money. (?)

[kjj]

3.6 million dollars per day works out to ~110 million per month.  By contrast, QE is creating 83,000 million dollars per month.
For the record, I don't see what the mining rate has to do with flows in and out of the exchanges.

Sorry, what is QE?

Is my math right with 110 million dollars per month - that worldwide, (assuming in this example that 1bc=1000 dollars) every month bitcoins have to be bought at 110 million dollars? Seems a cracy lot.

25 bitcoins are mined every 10 minutes, and these bitcoins are sold at some point. So to hold the price stable on average 25 bitcoins have to be sold every 10 minutes with new fiat money. (?)

QE is Quantitative Easing.  A strange term, but basically it means inflation.  The Federal Reserve is "easing" tightness in the economy by increasing the quantity of money, with the fig leaf of buying bonds.  This inflates the money supply, props up the bond market, and enables about a trillion dollars a year of federal spending.

Your math is right, but your assumptions almost certainly are not.  3600 new bitcoins mined per day does not in any way suggest that 3600 bitcoins are sold (for new cash) in that day.

[mcmuffmike]

Inflation refers to devaluation of currency through an increase in the money supply. Bitcoin is the opposite, its value increases as the money supply increases because the supply is finite. I.E: the value of the USD suffers inflation when the federal reserve prints more. In other words, when the federal reserve prints more money, the value of 1 dollar can buy less than it could have before. I wrote about this here https://bitcointalk.org/index.php?topic=359343.0