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Cryptocurrencies aren't necessarily deflationary. Some aspects are quite inflationary, in fact. They can fork. They can have arbitrarily-imposed coin limits
by nugget 9y ago
Cryptocurrencies aren't necessarily deflationary. Some aspects are quite inflationary, in fact. They can fork. They can have arbitrarily-imposed coin limits increased by changing a single line of code. Other aspects are deflationary, such as the ability for coins to be destroyed or lost forever. How these two forces are balanced against each other is up to the consensus stakeholders (miners) in each case. They should be expected to act in what they perceive to be their own best interests, which could be either deflationary or inflationary, in different scenarios. The interests in PoS and PoW systems could diverge significantly, as in a PoS system the miner's universal interest would presumably be to maximize the value of the currency, whereas in a PoW system the miner's interest would presumably be to maximize both the value of the currency they retained as well as the value of their real-world mining assets.
- namelost 9y agoI'm aware I might be fighting a losing battle here but the term is "expansionary" not "inflationary". Inflationary means that the value of a currency tends to go down over time. Expansionary means that the supply of a currency tends to go up over time. Bitcoin is mildly expansionary at the moment because the rate of coin creation is (presumably) greater than the rate of coin destruction. At some point this will flip and it will become contractionary. Regardless, Bitcoin is obviously highly deflationary as the value of a Bitcoin tends to go up over time.