Within 2 years, effectively 85% of all bitcoins are mined!

[zimmah]

I'm not sure when the effect of this will kick in, but it could be anywhere from 2016 to 2020.

but the effect will surely be noticed

[1715516963]

1715516963

[zimmah]

i don't understand why there is an inflation rate when btc is a deflation coin.. 

Because people who say it is deflationary mean it is after around the year 2140 but conveniently leave that out to try to confuse people - or are uninformed. 

so, right now, btc have an inflation rate? where can i find info of its value?

you can calculate it from the following facts, which can be freely found online

1) Current amount of bitcoins in circulation (total number of bitcoins mined minus the known lost bitcoins)

2) block reward (right now 25 bitcoin per 10 minutes, so 2.5 per minute).

With this you can calculate how much inflation per week/month/year

The inflation is now fairly high (about 10% or so) but will soon be lowered to 5% or so around 2016. It will then gradually drop to 4% and at the halving after that drop to about 2% (in 2018/2019) after that it will decrease even lower and by about 2020 the inflation will be much less than 1%, at which point it may be considered pretty much irrelevant.

[asdlolciterquit]

i don't understand why there is an inflation rate when btc is a deflation coin.. 

Because people who say it is deflationary mean it is after around the year 2140 but conveniently leave that out to try to confuse people - or are uninformed. 

so, right now, btc have an inflation rate? where can i find info of its value?

you can calculate it from the following facts, which can be freely found online

1) Current amount of bitcoins in circulation (total number of bitcoins mined minus the known lost bitcoins)

2) block reward (right now 25 bitcoin per 10 minutes, so 2.5 per minute).

With this you can calculate how much inflation per week/month/year

The inflation is now fairly high (about 10% or so) but will soon be lowered to 5% or so around 2016. It will then gradually drop to 4% and at the halving after that drop to about 2% (in 2018/2019) after that it will decrease even lower and by about 2020 the inflation will be much less than 1%, at which point it may be considered pretty much irrelevant.

thx for the info.

Just a question to realize if i've understood right: inflation will go down because in the next years demand will be more than supply?

[IIOII]

i don't understand why there is an inflation rate when btc is a deflation coin.. 

Because people who say it is deflationary mean it is after around the year 2140 but conveniently leave that out to try to confuse people - or are uninformed. 

Inflation means prices go up, or in other words the value of the currency becomes less...
An inflation rate as presented above only indicates that there will be more coins over time, new coins get created...
This does not necessarily mean that value of bitcoin becomes less over time...

On the contrary history has shown the opposite, bitcoins become worth more overtime, because of its initial low price and exponentially growing adoption rate and eco-system...
Price is determined by supply and demand...

Therefore; bitcoin is deflationary, although for the next 100 years there are still newly freshly minted coins...

Incorrect. Inflation in its economical strict sense does only mean that the amount of total monetary units is increased. This often leads to a loss of purchasing power of each monetary unit (prices of goods "go up" numerically), but it is not the same as inflation. So the observance of increasing prices is a possible effect of inflation.

Bitcoin is inflationary but has deflationary effects, because the demand for bitcoin exceeds the supply of new coins. So adoption and lost coins do not only compensate for possible inflationary effects (loss of purchasing power of each bitcoin) but lead to an increase in purchasing power of each bitcoin.

I think this depends on how you view "inflation", some people consider inflation to be when the prices of a basket of goods and services increases (this is generally how inflation is measured in the US and much of Europe).

In other places "inflation" is defined by the total money supply available in the economy.

Yes, I know that inflation is commonly defined in the former sense, but I think that definition is technically wrong when you consider the derivation of the term. Actually the word's usage to describe price increases may have been evolved from the observation that an increase in money supply subsequently causes (in many cases) price increases. But price increases can also be caused by other factors.

[wachtwoord]

i don't understand why there is an inflation rate when btc is a deflation coin.. 

Because people who say it is deflationary mean it is after around the year 2140 but conveniently leave that out to try to confuse people - or are uninformed. 

Inflation means prices go up, or in other words the value of the currency becomes less...
An inflation rate as presented above only indicates that there will be more coins over time, new coins get created...
This does not necessarily mean that value of bitcoin becomes less over time...

On the contrary history has shown the opposite, bitcoins become worth more overtime, because of its initial low price and exponentially growing adoption rate and eco-system...
Price is determined by supply and demand...

Therefore; bitcoin is deflationary, although for the next 100 years there are still newly freshly minted coins...

Incorrect. Inflation in its economical strict sense does only mean that the amount of total monetary units is increased. This often leads to a loss of purchasing power of each monetary unit (prices of goods "go up" numerically), but it is not the same as inflation. So the observance of increasing prices is a possible effect of inflation.

Bitcoin is inflationary but has deflationary effects, because the demand for bitcoin exceeds the supply of new coins. So adoption and lost coins do not only compensate for possible inflationary effects (loss of purchasing power of each bitcoin) but lead to an increase in purchasing power of each bitcoin.

I think this depends on how you view "inflation", some people consider inflation to be when the prices of a basket of goods and services increases (this is generally how inflation is measured in the US and much of Europe).

In other places "inflation" is defined by the total money supply available in the economy.

Yes, I know that inflation is commonly defined in the former sense, but I think that definition is technically wrong when you consider the derivation of the term. Actually the word's usage to describe price increases may have been evolved from the observation that an increase in money supply subsequently causes (in many cases) price increases. But price increases can also be caused by other factors.

I could not agree more. The fact that central banks claim that fiat money can deflate (and claim this is actually happening) proves beyond doubt how incompetent they are.

[Kluge]

i don't understand why there is an inflation rate when btc is a deflation coin.. 

Because people who say it is deflationary mean it is after around the year 2140 but conveniently leave that out to try to confuse people - or are uninformed. 

Inflation means prices go up, or in other words the value of the currency becomes less...
An inflation rate as presented above only indicates that there will be more coins over time, new coins get created...
This does not necessarily mean that value of bitcoin becomes less over time...

On the contrary history has shown the opposite, bitcoins become worth more overtime, because of its initial low price and exponentially growing adoption rate and eco-system...
Price is determined by supply and demand...

Therefore; bitcoin is deflationary, although for the next 100 years there are still newly freshly minted coins...

Incorrect. Inflation in its economical strict sense does only mean that the amount of total monetary units is increased. This often leads to a loss of purchasing power of each monetary unit (prices of goods "go up" numerically), but it is not the same as inflation. So the observance of increasing prices is a possible effect of inflation.

Bitcoin is inflationary but has deflationary effects, because the demand for bitcoin exceeds the supply of new coins. So adoption and lost coins do not only compensate for possible inflationary effects (loss of purchasing power of each bitcoin) but lead to an increase in purchasing power of each bitcoin.

I think this depends on how you view "inflation", some people consider inflation to be when the prices of a basket of goods and services increases (this is generally how inflation is measured in the US and much of Europe).

In other places "inflation" is defined by the total money supply available in the economy.

Yes, I know that inflation is commonly defined in the former sense, but I think that definition is technically wrong when you consider the derivation of the term. Actually the word's usage to describe price increases may have been evolved from the observation that an increase in money supply subsequently causes (in many cases) price increases. But price increases can also be caused by other factors.

I could not agree more. The fact that central banks claim that fiat money can deflate (and claim this is actually happening) proves beyond doubt how incompetent they are.

I guess they could just report that purchasing power is increasing... Either way, QE∞ + "deflation" isn't a good sign, I imagine. There's an enormous elephant invisible to me if the economy's recovering, the housing market is resuming bubble status, monetary supply is increasing rapidly, and CPI is somehow stagnating, occasionally being negative. I doubt it's that the money supply isn't actually increasing, and house prices seem to clearly be nearing pre-crash peak to me...

[ajareselde]

I'm not sure when the effect of this will kick in, but it could be anywhere from 2016 to 2020.

but the effect will surely be noticed

The real question is; will anyone care when it happens.
Seams like the bitcoin bubble is being slowly drained of its momentum.
I seriously have doubts it will sustain >400$ prices for much longer

[zimmah]

i don't understand why there is an inflation rate when btc is a deflation coin..  

Because people who say it is deflationary mean it is after around the year 2140 but conveniently leave that out to try to confuse people - or are uninformed.  

so, right now, btc have an inflation rate? where can i find info of its value?

you can calculate it from the following facts, which can be freely found online

1) Current amount of bitcoins in circulation (total number of bitcoins mined minus the known lost bitcoins)

2) block reward (right now 25 bitcoin per 10 minutes, so 2.5 per minute).

With this you can calculate how much inflation per week/month/year

The inflation is now fairly high (about 10% or so) but will soon be lowered to 5% or so around 2016. It will then gradually drop to 4% and at the halving after that drop to about 2% (in 2018/2019) after that it will decrease even lower and by about 2020 the inflation will be much less than 1%, at which point it may be considered pretty much irrelevant.

thx for the info.

Just a question to realize if i've understood right: inflation will go down because in the next years demand will be more than supply?

The inflation (monetary base inflation) is the new money created compared to the money there already is.

So, if there is 1 bitcoin, and i mine more bitcoin, that's an inflation of 100%. But if i mine 1 bitcoin while there are 1000 bitcoin, that's an inflation of 0.1%

Right now, there are 13,276,000 bitcoins mined (https://blockchain.info/charts/total-bitcoins) and there are about 25 bitcoins mined every 10 minutes (slightly faster, due to difficulty lagg).

That means, every year (a year has 525949 minutes, so 52594.9 times 10 minutes) 25*52594.9 = 1,314,872.5 bitcoin are mined (at least until block reward halves)

That means, the next year, inflation is  1,314,872.5/13,276,000 which is roughly 10% (9,9%)

The year after that, there will still be 1,314,872.5 coins mined (assuming difficulty has not readjusted by the end of next year) but the amount of coins mined will be 13,276,000 + 1,314,872.5 = 14590872.5 so inflation will be 1,314,872.5/14,590,872.5 = 9% This is a gradual decrease of inflation that happens constantly.

the year after that difficulty will likely have been readjusted, so the amount of coins mined per year will be about 657,436.25 (because 12.5 coins per 10 minutes) and the amount of bitcoins will be about 15,905,745 when that happens. So inflation will suddenly drop in half (this happens about every 2 years, on top of the gradual decrease in inflation). 657,436.25/15,905,745 = 4.1%

So in just about 2 years, inflation would be lowered from 9.9% to 4.1% and the two years after that it's not even 2% anymore. That's even faster than i guestimated in the previous post.

[bitebits]

Great post zimmah, thanks for the effort.

[silversurfer1958]

Long may it continue, someone buying 1 BTC a couple of yrs ago made a few hundred dollars by now.
And if it continues like this, someone buying 0.01 BTC today will make a few hundred dollars in a few years time.
What's the problem.
No one's missed the boat,
Bitcoin is deflationary over the long term,
the time to jump on board (cautiously) is always today.

[zorke]

i don't understand why there is an inflation rate when btc is a deflation coin.. 

Because people who say it is deflationary mean it is after around the year 2140 but conveniently leave that out to try to confuse people - or are uninformed. 

Inflation means prices go up, or in other words the value of the currency becomes less...
An inflation rate as presented above only indicates that there will be more coins over time, new coins get created...
This does not necessarily mean that value of bitcoin becomes less over time...

On the contrary history has shown the opposite, bitcoins become worth more overtime, because of its initial low price and exponentially growing adoption rate and eco-system...
Price is determined by supply and demand...

Therefore; bitcoin is deflationary, although for the next 100 years there are still newly freshly minted coins...

Incorrect. Inflation in its economical strict sense does only mean that the amount of total monetary units is increased. This often leads to a loss of purchasing power of each monetary unit (prices of goods "go up" numerically), but it is not the same as inflation. So the observance of increasing prices is a possible effect of inflation.

Bitcoin is inflationary but has deflationary effects, because the demand for bitcoin exceeds the supply of new coins. So adoption and lost coins do not only compensate for possible inflationary effects (loss of purchasing power of each bitcoin) but lead to an increase in purchasing power of each bitcoin.

I think this depends on how you view "inflation", some people consider inflation to be when the prices of a basket of goods and services increases (this is generally how inflation is measured in the US and much of Europe).

In other places "inflation" is defined by the total money supply available in the economy.

Yes, I know that inflation is commonly defined in the former sense, but I think that definition is technically wrong when you consider the derivation of the term. Actually the word's usage to describe price increases may have been evolved from the observation that an increase in money supply subsequently causes (in many cases) price increases. But price increases can also be caused by other factors.

I would say that deflation would generally be when prices are falling as a whole. It is nearly impossible for overall money supply to fall as a whole as the central bank could simply print more money to prevent this (thus preventing deflation even being an economic concept if it was measured by money supply).

[TradersWay.JC]

Some say that Bitcoin will begin rising again in the near future to newer and newer highs. I just can't help but think that it will behave like the Yahoo stock at the end of the 90s...

[hakkzpets2]

Sometimes I wonder what will happen when all the bitcoins will be mined,like the king of coins will be gone from mining.How will it effect the crypto world then?

[cryptozio]

Some say that Bitcoin will begin rising again in the near future to newer and newer highs. I just can't help but think that it will behave like the Yahoo stock at the end of the 90s...

Just have some faith and hold your bitcoin savings, they will eventually rise again.

[TradersWay.JC]

Ours have been mined so we will let them ride for a while!

We just need more and more businesses to have confidence in them. Those who make international payments over the internet especially; it is much cheaper than using a third party system that takes a few percent.

[IIOII]

I would say that deflation would generally be when prices are falling as a whole. It is nearly impossible for overall money supply to fall as a whole as the central bank could simply print more money to prevent this (thus preventing deflation even being an economic concept if it was measured by money supply).

In theory central banks could deflate money supply by reducing the monetary units in circulation. But they don't do it, because it's not their policy. These days, central banks only inflate, they never deflate. Deflation mostly occurs as a singular event when central banks have inflated a lot and currency use becomes impractical. Such events they use to call euphemistically a "currency reform". I guess, we'll all have the questionable honor to experience such an event in our lifetime.

[Rakitich]

If you don't have a BTC by now you are mentally handicapped.

[johncarpe64]

I would say that deflation would generally be when prices are falling as a whole. It is nearly impossible for overall money supply to fall as a whole as the central bank could simply print more money to prevent this (thus preventing deflation even being an economic concept if it was measured by money supply).

In theory central banks could deflate money supply by reducing the monetary units in circulation. But they don't do it, because it's not their policy. These days, central banks only inflate, they never deflate. Deflation mostly occurs as a singular event when central banks have inflated a lot and currency use becomes impractical. Such events they use to call euphemistically a "currency reform". I guess, we'll all have the questionable honor to experience such an event in our lifetime.

Anything is possible in theory, but I don't think this would happen in practice. Can you provide an example when a central bank engaged in this kind of deflation over a period of at least 6 months (a time period that I would consider to be short to medium term)? I do not know of one, nor do I think one exists.

AFAIK even in times of hyperinflation central banks have not engaged in this kind of deflationary policies.

EDIT: hyperinflation in terms of risking prices

[IIOII]

I would say that deflation would generally be when prices are falling as a whole. It is nearly impossible for overall money supply to fall as a whole as the central bank could simply print more money to prevent this (thus preventing deflation even being an economic concept if it was measured by money supply).

In theory central banks could deflate money supply by reducing the monetary units in circulation. But they don't do it, because it's not their policy. These days, central banks only inflate, they never deflate. Deflation mostly occurs as a singular event when central banks have inflated a lot and currency use becomes impractical. Such events they use to call euphemistically a "currency reform". I guess, we'll all have the questionable honor to experience such an event in our lifetime.

Anything is possible in theory, but I don't think this would happen in practice. Can you provide an example when a central bank engaged in this kind of deflation over a period of at least 6 months (a time period that I would consider to be short to medium term)? I do not know of one, nor do I think one exists.

AFAIK even in times of hyperinflation central banks have not engaged in this kind of deflationary policies.

EDIT: hyperinflation in terms of risking prices

I already said in my second sentence, that central banks don't deflate continuously, because it doesn't fit their policy. When deflation occurs it's a singular event, a "currency reform".

[johncarpe64]

I would say that deflation would generally be when prices are falling as a whole. It is nearly impossible for overall money supply to fall as a whole as the central bank could simply print more money to prevent this (thus preventing deflation even being an economic concept if it was measured by money supply).

In theory central banks could deflate money supply by reducing the monetary units in circulation. But they don't do it, because it's not their policy. These days, central banks only inflate, they never deflate. Deflation mostly occurs as a singular event when central banks have inflated a lot and currency use becomes impractical. Such events they use to call euphemistically a "currency reform". I guess, we'll all have the questionable honor to experience such an event in our lifetime.

Anything is possible in theory, but I don't think this would happen in practice. Can you provide an example when a central bank engaged in this kind of deflation over a period of at least 6 months (a time period that I would consider to be short to medium term)? I do not know of one, nor do I think one exists.

AFAIK even in times of hyperinflation central banks have not engaged in this kind of deflationary policies.

EDIT: hyperinflation in terms of risking prices

I already said in my second sentence, that central banks don't deflate continuously, because it doesn't fit their policy. When deflation occurs it's a singular event, a "currency reform".

Could you give an example of "currency reform" when the peak amount of currency was not exceeded within 6 months? In other words, on January 2015 there is $100 in currency in the economy, then on January 5th, the central banks takes some amount of money out via "currency reform", then there would still be some amount less then $100 in currency through the end of June 2015.

Can you give any real world examples of when central banks wanted to engage in deflation in your terms at all?