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But by that definition bitcoin is inflationary depending on where you draw the lines. There was a period of about 3 years where bitcoin's value was dropping eve

But by that definition bitcoin is inflationary depending on where you draw the lines. There was a period of about 3 years where bitcoin's value was dropping every day, and just this weekend it dropped 10-20%. How can "deflation" be a useful definition if it can apply or not depending on the ever changing value of an asset? or even what you compare the value against.

JumpCrisscross 9y ago
> How can "deflation" be a useful definition if it can apply or not depending on the ever changing value of an asset? I responded to this question elsewhere [1]. TL; DR Economies can change modes. The American economy was hyper inflationary in the 1970s, then deflationary in the early 1980s and the flipped back to a long-run trend growth of inflation until the dot-com bust. The gold standard for measuring price level changes is to measure actual prices. The inscrutability of the Bitcoin economy forces the use of proxy metrics, e.g. the exchange rate between U.S. dollars and Bitcoins. This is appropriate given the entire legitimate Bitcoin economy is a subset of the U.S. dollar economy, with prices in Bitcoin often being pegged to an implied U.S. dollar price. [1] https://news.ycombinator.com/item?id=16097280 https://news.ycombinator.com/item?id=16097280
- Klathmon 9y ago
  Fair enough. I still disagree that bitcoin being eventually limited in supply is a bad thing, but it appears that I have misunderstood the meaning of inflation and deflation, and I struggle to understand why the definition as you described it is useful. >This is appropriate given the entire legitimate Bitcoin economy is a subset of the U.S. dollar economy, with prices in Bitcoin often being pegged to an implied U.S. dollar price. I think this is a consequence of our language and location, as bitcoin is a global asset and therefore gets pegged against many other currencies across the planet. Still, I understand your point, and I appreciate the discussion!

JumpCrisscross 9y ago

> How can "deflation" be a useful definition if it can apply or not depending on the ever changing value of an asset? I responded to this question elsewhere [1]. TL; DR Economies can change modes. The American economy was hyper inflationary in the 1970s, then deflationary in the early 1980s and the flipped back to a long-run trend growth of inflation until the dot-com bust. The gold standard for measuring price level changes is to measure actual prices. The inscrutability of the Bitcoin economy forces the use of proxy metrics, e.g. the exchange rate between U.S. dollars and Bitcoins. This is appropriate given the entire legitimate Bitcoin economy is a subset of the U.S. dollar economy, with prices in Bitcoin often being pegged to an implied U.S. dollar price. [1] https://news.ycombinator.com/item?id=16097280 https://news.ycombinator.com/item?id=16097280

Klathmon 9y ago
Fair enough. I still disagree that bitcoin being eventually limited in supply is a bad thing, but it appears that I have misunderstood the meaning of inflation and deflation, and I struggle to understand why the definition as you described it is useful. >This is appropriate given the entire legitimate Bitcoin economy is a subset of the U.S. dollar economy, with prices in Bitcoin often being pegged to an implied U.S. dollar price. I think this is a consequence of our language and location, as bitcoin is a global asset and therefore gets pegged against many other currencies across the planet. Still, I understand your point, and I appreciate the discussion!