Does halving really create deflation?

[iv4n]

Let's look at a straight sense. A balance between limited bitcoin and too many people is sought. In this case, the price will increase if there is demand for bitcoin. Miners system is the main backbone. The system works with them. Now I can not say that I do not have a connection with deflation.

You don't have connections with deflation, that's for sure, on other side bitcoin halving will not create deflation. In economic sense deflation is a reduction in money supply, halving is reducing block rewards for miners, but in same time we expect price of bitcoin to grow, when that happens miners will get similar rewards in value. Bitcoin have many decimals and that is a game changer for the economy, we can apply many economic laws in crypto market, but we cant apply them all.

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[Trela]

In the end, it's always supply and demand.

Yes, that's true! The nature of the trading market always needs the existence of supply and demand, lack of either of these factors; it will create an imbalance and cause market volatility.

So for Bitcoin, why is there a deflation? Although I know that miners will find it harder to mine bitcoins after every Halving event, the value of our goods stays the same and is based on fiat money. Bitcoin's price is still being manipulated and it is not necessarily a strong growth after halving. or the best example is Litecoin. after halving, its price is halved instead of rising higher.

The value of a cryptocurrency depends a lot on its community. From the beginning, almost the "newbie" knew the concepts of "Altcoin" and "Cryptocurrency" were all through Bitcoin. So from the start, Bitcoin had a much better liquidity market than Litecoin - one clone crypto of Bitcoin. Litecoin lost its value in half after Halving just because its community was too small, so it was not enough to attract investors to hold it and push the price. Or at least keep its value.
IMO, I see the Litecoin community even smaller than Ethereum or Ripple at this time.

[Betwrong]

After reading through this thread I'm going to sum up my conclusions.

1. No, halving does not create deflation. We'll start getting a real deflation only when the last coin is mined. As @NeuroticFish rightly pointed out, we can say that in our case halving is a decrease of inflation.

2. The price of BTC shouldn't necessarily rise after halving, because demand is a big factor, and it's unpredictable.

3. We can expect the price rising, because it is pretty unlikely that the demand will drop to the extent so that it will counterbalance the vanishing of 900 BTC from the market daily.

[Twentyonepaylots]

After reading through this thread I'm going to sum up my conclusions.

1. No, halving does not create deflation. We'll start getting a real deflation only when the last coin is mined. As @NeuroticFish rightly pointed out, we can say that in our case halving is a decrease of inflation.

yes we haven't experienced a deflationary halving yet with the previous halving occurred but as we slowly coming to the final halving the market will start to deflate.

2. The price of BTC shouldn't necessarily rise after halving, because demand is a big factor, and it's unpredictable.

Well then the halving will surely bring back the memories of the past and that will generate a high demand after that although we are still not sure what the incoming halving will actually bring to us.

3. We can expect the price rising, because it is pretty unlikely that the demand will drop to the extent so that it will counterbalance the vanishing of 900 BTC from the market daily.

There's a high chance that it will be going to happen again.

[TastyChillySauce00]

You don't have connections with deflation, that's for sure, on other side bitcoin halving will not create deflation. In economic sense deflation is a reduction in money supply, halving is reducing block rewards for miners, but in same time we expect price of bitcoin to grow, when that happens miners will get similar rewards in value. Bitcoin have many decimals and that is a game changer for the economy, we can apply many economic laws in crypto market, but we cant apply them all.

The price grows due to the halving of block reward is what people really want but the reality usually different. The price could just not move at all because the market is not really influenced by the blockchain reward which miners received. So, you just don't expect that thing to happen. Although, by halving the reward it will make people become more aware of how much their coin actually worth.

[justdimin]

Think about it this way, if there is scarcity of bitcoin which creates some sort of demand for it to stay same but the supply gets lower and lower both because less mined bitcoins but also more people hoarding and losing their bitcoins, what do you think would happen? How could people think that less bitcoins can never mean deflation, of course it does.

However, one true reality that always looms over our heads is that, will bitcoin one day actually die? We have talked about how awesome bitcoin is and how it will never die but we are forgetting that technology is ever improving and market doesn't care about ideology it cares about profits. So, if bitcoin stays popular then for sure it will definitely get more expensive with halving but for how long? We don't know.

[asus09]

Halving bitcoin on May next year and take about five months later but bitcoin and altcoin have been with lower price today, I think still long time for bitcoin halving day and have chance for bitcoin and altcoin back with higher price again, just wait and see what will happen with bitcoin price later on halving day, have higher price or not because we can't prediction with bitcoin price.

[iv4n]

You don't have connections with deflation, that's for sure, on other side bitcoin halving will not create deflation. In economic sense deflation is a reduction in money supply, halving is reducing block rewards for miners, but in same time we expect price of bitcoin to grow, when that happens miners will get similar rewards in value. Bitcoin have many decimals and that is a game changer for the economy, we can apply many economic laws in crypto market, but we cant apply them all.

The price grows due to the halving of block reward is what people really want but the reality usually different. The price could just not move at all because the market is not really influenced by the blockchain reward which miners received. So, you just don't expect that thing to happen. Although, by halving the reward it will make people become more aware of how much their coin actually worth.

How can you say that reality is different, when after every halving we have higher price.


Market is influenced in many ways by many factors, from all of them two are very important ones, its supply and demand, halving is changing the supply, which can affect the price in long run.

[Betwrong]

After reading through this thread I'm going to sum up my conclusions.

1. No, halving does not create deflation. We'll start getting a real deflation only when the last coin is mined. As @NeuroticFish rightly pointed out, we can say that in our case halving is a decrease of inflation.

yes we haven't experienced a deflationary halving yet with the previous halving occurred but as we slowly coming to the final halving the market will start to deflate.

If you mean 2140, I think it's too far away from us to think about it. But what's interesting is that we don't know for sure how many coins are lost every year, so, theoretically, it's possible that we have already entered the deflationary phase. According to Chainalysis, between 17 and 23 percent of all BTC is already lost irrevocably. Who knows how many BTC will be lost during the year after the next halving, and whether that amount will not be greater than what will be mined during the same period of time?

I mean it's not that hard to calculate how many BTC will be mined from May 2020 to May 2021.

We have around 52,560 blocks per year, so

52,560 x 6.25 BTC = 328,500 BTC

It's only around 1.6%, so it's possible that over that amount will be lost during the same time.