Price of Bitcoins Holding Steady and Slowly Rising

[jimbobway]

http://www.bitcoinblogger.com/2010/08/click-on-graph-to-see-larger-image.html

[kiba]

The price managed to be steady in the face of inflation. I don't noticed much significant growth in the way of traffic on the forum, since my arrival after the slashdot event.

[GoldRush]

The price managed to be steady in the face of inflation.

If prices are remaining steady then there is no inflation.    In the case of bitcoins, there will have to be high deflation if bitcoins are widely adopted.

The rate at which bitcoins are generated is fixed over the long term.  If you increase the demand for bitcoins at a rate faster than they are being generated, then they will become more valuable compared to other currencies.  That is deflation.  We have seen deflation in the bitcoin and we will continue to see deflation if bitcoins are successful.  If people do not value and demand bitcoins, then you will see inflation.

[hugolp]

You are comparing bitcoins to dollars, which is not a very stable currency. If the dollars keeps devaluating like it has done in the last decades and the bitcoin-dollar exchange keeps stable it means bitcoins are loosing value.

[caveden]

But hugolp, currently bitcoins are at a very fast monetary inflation rate, maybe even faster than the dollar.

And trebonics, you're talking about price variation, sometimes called price inflation/deflation too. That's the measurement of a price index through a currency.
I think the person you quoted was talking about monetary inflation, which is actual money creation.

[fresno]

I think the person you quoted was talking about monetary inflation, which is actual money creation.

In that case, Obama really IS a genius.

[Babylon]

The price managed to be steady in the face of inflation.

If prices are remaining steady then there is no inflation.    In the case of bitcoins, there will have to be high deflation if bitcoins are widely adopted.

The rate at which bitcoins are generated is fixed over the long term.  If you increase the demand for bitcoins at a rate faster than they are being generated, then they will become more valuable compared to other currencies.  That is deflation.  We have seen deflation in the bitcoin and we will continue to see deflation if bitcoins are successful.  If people do not value and demand bitcoins, then you will see inflation.

Two different forms of inflation.  You are talking about price inflation.  He was talking about supply inflation.  The supply certainly did inflate.  The fact that price did not (at least relative to dollars, which had a fairly small amount of inflation in the period mentioned) means that the bitcoin economy is growing in pace with the supply.

[MoonShadow]

The price managed to be steady in the face of inflation.

If prices are remaining steady then there is no inflation.    In the case of bitcoins, there will have to be high deflation if bitcoins are widely adopted.

The rate at which bitcoins are generated is fixed over the long term.  If you increase the demand for bitcoins at a rate faster than they are being generated, then they will become more valuable compared to other currencies.  That is deflation.  We have seen deflation in the bitcoin and we will continue to see deflation if bitcoins are successful.  If people do not value and demand bitcoins, then you will see inflation.

Two different forms of inflation.  You are talking about price inflation.  He was talking about supply inflation.  The supply certainly did inflate.  The fact that price did not (at least relative to dollars, which had a fairly small amount of inflation in the period mentioned) means that the bitcoin economy is growing in pace with the supply.

No.  GoldRush is correct, but is expressing it in a confusing manner.  Inflation is when the monetary base increases relative to the economic activity that the currency represents.  So the steady increase in the Bitcoin price, as measured in US$, represents either the decrease of the Bitcoin base relative to the economic activity Bitcoin represents (which could be an increase in the demand for bitcoins due to a growing user base or a decrease in the monetary base with a static economy, we can assume it's the former) or inflation of the US $, or both.

It's probably both.  Considering the rate that the Bitcoin monetary base is currently increasing, it seems improbable that increases the Bitcoin economic activity explain the rising price, and whatever rate that US$ may be inflating, it's not that high.

[MoonShadow]

The price managed to be steady in the face of inflation.

If prices are remaining steady then there is no inflation.    In the case of bitcoins, there will have to be high deflation if bitcoins are widely adopted.

The rate at which bitcoins are generated is fixed over the long term.  If you increase the demand for bitcoins at a rate faster than they are being generated, then they will become more valuable compared to other currencies.  That is deflation.  We have seen deflation in the bitcoin and we will continue to see deflation if bitcoins are successful.  If people do not value and demand bitcoins, then you will see inflation.

Two different forms of inflation.  You are talking about price inflation.  He was talking about supply inflation.  The supply certainly did inflate.  The fact that price did not (at least relative to dollars, which had a fairly small amount of inflation in the period mentioned) means that the bitcoin economy is growing in pace with the supply.

No.  GoldRush is correct, but is expressing it in a confusing manner.  Inflation is when the monetary base increases relative to the economic activity that the currency represents.  So the steady increase in the Bitcoin price, as measured in US$, represents either the decrease of the Bitcoin base relative to the economic activity Bitcoin represents (which could be an increase in the demand for bitcoins due to a growing user base or a decrease in the monetary base with a static economy, we can assume it's the former) or inflation of the US $, or both.

It's probably both.  Considering the rate that the Bitcoin monetary base is currently increasing, it seems improbable that increases the Bitcoin economic activity explain the rising price, and whatever rate that US$ may be inflating, it's not that high.

Inflation = increase in supply of money and credit -- example: 1970s, weimar republic
Deflation = decrease in supply of money and credit -- example: great depression, japan's lost decade

In the above examples, an economy stable enough to consider it's variable effects to be negligble is assumed.  This is not so with Bitcoin.

[hugolp]

Inflation is when the monetary base increases relative to the economic activity that the currency represents.

Inflation is when there is a increase of the monetary base above of the demand of that money.

[MoonShadow]

Inflation is when the monetary base increases relative to the economic activity that the currency represents.

Inflation is when there is a increase of the monetary base above of the demand of that money.

We are just saying the same things with different words.