5 ms·

> Cryptocurrencies are inherently deflationary How so?

by blueprint 9y ago

tpxl 9y ago
There's a limited amount of bitcoin to go around.
- boobsbr 9y ago
  Wouldn't that make the value of a token rise, as there is demand but no supply?
  - tpxl 9y ago
    Yes, that is what deflation is, is it not? More goods for the same amount of currency?
    - boobsbr 9y ago
      You're right, my bad.
- blueprint 9y ago
  There are other cryptocurrencies aside from Bitcoin, even if Bitcoin is not able to be a true currency (e.g. fungibility issue). See Monero. It has a tail emission.
  - tpxl 9y ago
    Every cryptocurrency based on Bitcoin mechanics has the same problems as Bitcoin. That, as you rightly pointed out, does not discount other cryptocurrencies without these issues. I was aiming solely at Bitcoin (and similar cryptocurrencies).
girvo 9y ago
Most of the so-far released ones have a specific cap on how many tokens will be mined. Bitcoin does, for example. But it's not a hard requirement of cryptocurrencies, I think.
- mavhc 9y ago
  Bitcoin is also designed to make future coins harder to mine, thus more expensive. The only incentive to sell bitcoin is if you think the entire thing is about to fail.
  - sanswork 9y ago
    Bitcoin isn't really designed to do that. It is designed to increase difficulty with competition. If no one was interested in mining bitcoin it would be exactly the same difficulty to mine today as it was one day one.
    - mavhc 9y ago
      Doesn't the reward halve every 210000 blocks?
      - sanswork 9y ago
        The size of the reward doesn't actually change the difficulty though.
- deleted 9y ago
  [deleted]
simonh 9y ago
Eventually all the BTC will have been mined and no new BTC will ever be created again, unlike regular currencies in which the money supply can always rise alongside the expansion of the economy. BTC will eventually become a fiscal straight jacket. It may take quite a while to take effect, but is inevitable and the more BTC become integrated into the economy, the more eventual pain it will cause down the line.
- blueprint 9y ago
  All cryptocurrencies are inherently deflationary because one example of an attempt at a cryptocurrency (BTC) is inherently deflationary?
  - simonh 9y ago
    All current attempts at cryptocurrencies, of which there are very, very many have been inherently deflationary. Can you point me to a single one either current or even planned that isn't? We are discussing the real world.
    - sanswork 9y ago
      Both Ether and Monero are uncapped and deflationary. So 2 out of the top 10 at the moment. I didn't bother checking beyond that.
  - erispoe 9y ago
    If you have a limited supply of currency in a growing economy, it's inherently deflationary. So far I haven't seen proposals for cryptocurrencies that can grow as a function of the underlying economy. Maybe there are some.
- alexasmyths 9y ago
  The 'main reason' BTC is deflationary is because it's not used as a currency, and as prices rise, people want to 'hold' thereby creating less liquidity etc. It's a funny thing to watch.
- 9y ago

> Cryptocurrencies are inherently deflationary How so?

tpxl 9y ago

There's a limited amount of bitcoin to go around.

boobsbr 9y ago
Wouldn't that make the value of a token rise, as there is demand but no supply?
- tpxl 9y ago
  Yes, that is what deflation is, is it not? More goods for the same amount of currency?
  - boobsbr 9y ago
    You're right, my bad.
blueprint 9y ago
There are other cryptocurrencies aside from Bitcoin, even if Bitcoin is not able to be a true currency (e.g. fungibility issue). See Monero. It has a tail emission.
- tpxl 9y ago
  Every cryptocurrency based on Bitcoin mechanics has the same problems as Bitcoin. That, as you rightly pointed out, does not discount other cryptocurrencies without these issues. I was aiming solely at Bitcoin (and similar cryptocurrencies).

girvo 9y ago

Most of the so-far released ones have a specific cap on how many tokens will be mined. Bitcoin does, for example. But it's not a hard requirement of cryptocurrencies, I think.

mavhc 9y ago
Bitcoin is also designed to make future coins harder to mine, thus more expensive. The only incentive to sell bitcoin is if you think the entire thing is about to fail.
- sanswork 9y ago
  Bitcoin isn't really designed to do that. It is designed to increase difficulty with competition. If no one was interested in mining bitcoin it would be exactly the same difficulty to mine today as it was one day one.
  - mavhc 9y ago
    Doesn't the reward halve every 210000 blocks?
    - sanswork 9y ago
      The size of the reward doesn't actually change the difficulty though.
deleted 9y ago
[deleted]

simonh 9y ago

Eventually all the BTC will have been mined and no new BTC will ever be created again, unlike regular currencies in which the money supply can always rise alongside the expansion of the economy. BTC will eventually become a fiscal straight jacket. It may take quite a while to take effect, but is inevitable and the more BTC become integrated into the economy, the more eventual pain it will cause down the line.

blueprint 9y ago
All cryptocurrencies are inherently deflationary because one example of an attempt at a cryptocurrency (BTC) is inherently deflationary?
- simonh 9y ago
  All current attempts at cryptocurrencies, of which there are very, very many have been inherently deflationary. Can you point me to a single one either current or even planned that isn't? We are discussing the real world.
  - sanswork 9y ago
    Both Ether and Monero are uncapped and deflationary. So 2 out of the top 10 at the moment. I didn't bother checking beyond that.
- erispoe 9y ago
  If you have a limited supply of currency in a growing economy, it's inherently deflationary. So far I haven't seen proposals for cryptocurrencies that can grow as a function of the underlying economy. Maybe there are some.
alexasmyths 9y ago
The 'main reason' BTC is deflationary is because it's not used as a currency, and as prices rise, people want to 'hold' thereby creating less liquidity etc. It's a funny thing to watch.
9y ago