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Bitcoin has inflation because there is still a block reward to subsidize mining. Speculators driving up the USD exchange rate does not create new units of the c
by thinkmassive 8y ago
Bitcoin has inflation because there is still a block reward to subsidize mining. Speculators driving up the USD exchange rate does not create new units of the currency, it isn’t inflation.
- GTP 8y agoIt's inflation because by buying/selling large quantities they effectively change bitcoin's value. In fact in the past there were a lot of repentine changes in bitcoin's value and not by some cents but in the order of hundreds of dollars.This is an inflation higher than most if not all "traditional" currencies.
- shkkmo 8y agoInflation is not (directly) related to the supply of a currency, but to the value of that currency (usually measured vs the amount of goods/services a unit can purchase). When a currency loses value over time, it is inflating, when it gains value over time, it is deflating. Now, supply of a currency CAN impact its value, so large increases in supply can lead to large decreases in value. It seems pretty obvious that the main driver of value changes in Bitcoin is not the supply but the demand. The block reward will only have a significant impact on the deflation of bitcoin if demand becomes much, much more stable. Since the primary driver of Bitcoin demand is speculation, this does not seem likely anytime soon.