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I've been interested in what will happen without the block reward. One (small) thing which really irritates me about bitcoin is how it is claimed it is "not in

I've been interested in what will happen without the block reward. One (small) thing which really irritates me about bitcoin is how it is claimed it is "not inflationary", yet for it's entire existence so far, the block reward has made it more inflationary than all major currencies -- it's easy to claim that at some point in the future you will stop inflation, I'll believe it when I see it.

wildbunny 6y ago
You don't need to 'claim' anything. It's written into the rules of the blockchain. You cannot change the rules like that and expect to have your blocks appended to the canonical chain.
- fanciestManimal 6y ago
  It depends on where the miners and users go. I don't know that we can predict today what people in the future will view the incentives to be, but its certainly not impossible that the collective view of the bitcoin community might shift towards some change on that front. I'm not saying this is the only solution, but if having no block rewards really threatens the existence of bitcoin, and a regular inflation rate were deemed to be the beset way to solve that -- the cap on the number of coins isn't actually immutable. There would be a hard fork in that case, sure, but if that's where the people went, that's where the value would go. Keep in mind that the miners would have some incentive to back a change to that cap. Every block reward would be extracting value from the non-mining users and distributing it to themselves -- similar to the inflation tax we face with normal currencies. It's not inconceivable that they could drag the user base along with if it was seen as existential. A 2% inflation rate is better than the collapse of something holding a significant fraction of one's wealth.
BelenusMordred 6y ago
> yet for it's entire existence so far, the block reward has made it more inflationary than all major currencies Why does every HN bitcoin thread have this ridiculously incorrect statement being mindless parroted? The inflation rate of bitcoin is currently 1.8%, this is easily confirmed for anyone willing to put in 10 seconds of research. In comparison the US M1 monetary supply is up over 60% in the last year and the S&P 500 valuation is at all time highs despite a massive global recession. At what point will people actually capitulate regarding the value of cash in their wallet being rapidly inflated away across the planet? https://tradingeconomics.com/united-states/money-supply-m1 https://tradingeconomics.com/united-states/money-supply-m1
- CJefferson 6y ago
  I was just considering inflation that people see "on the street". By including M1, aren't you including fractional banking? If that is so, if bitcoin became "standard currency", banks would just fractionally bank bitcoin.
  - BelenusMordred 6y ago
    Even if you are using CPI as monetary "inflation", it's still far below the CPI target of every developed economy on Earth. Do think M1 is the more accurate measure here because the amount of bitcoin in circulation is the equivalent of M1 as defined by everyone: "currency in supply". https://en.wikipedia.org/wiki/M1_(money_supply_measure) https://en.wikipedia.org/wiki/M1_(money_supply_measure)
- jrek 6y ago
  Growth in money supply =/= inflation. If price stability is what you want then the money supply has to increase as production increases to avoid deflation.
  - BelenusMordred 6y ago
    It's certainly the meaning in some contexts. The problem with the word is it is widely used for consumer price inflation. When talking about asset and monetary inflation people still shorten it to simply "inflation" Growth in money supply is the proper way to compare to different monetary systems like bitcoin and the dollar. > to avoid deflation Last I looked nearly every person on Earth wants price deflation in food/electricity/cars/iphones/etc. The onus on you here to show why that is such a bad thing for society?

wildbunny 6y ago

You don't need to 'claim' anything. It's written into the rules of the blockchain. You cannot change the rules like that and expect to have your blocks appended to the canonical chain.

fanciestManimal 6y ago
It depends on where the miners and users go. I don't know that we can predict today what people in the future will view the incentives to be, but its certainly not impossible that the collective view of the bitcoin community might shift towards some change on that front. I'm not saying this is the only solution, but if having no block rewards really threatens the existence of bitcoin, and a regular inflation rate were deemed to be the beset way to solve that -- the cap on the number of coins isn't actually immutable. There would be a hard fork in that case, sure, but if that's where the people went, that's where the value would go. Keep in mind that the miners would have some incentive to back a change to that cap. Every block reward would be extracting value from the non-mining users and distributing it to themselves -- similar to the inflation tax we face with normal currencies. It's not inconceivable that they could drag the user base along with if it was seen as existential. A 2% inflation rate is better than the collapse of something holding a significant fraction of one's wealth.

BelenusMordred 6y ago

> yet for it's entire existence so far, the block reward has made it more inflationary than all major currencies Why does every HN bitcoin thread have this ridiculously incorrect statement being mindless parroted? The inflation rate of bitcoin is currently 1.8%, this is easily confirmed for anyone willing to put in 10 seconds of research. In comparison the US M1 monetary supply is up over 60% in the last year and the S&P 500 valuation is at all time highs despite a massive global recession. At what point will people actually capitulate regarding the value of cash in their wallet being rapidly inflated away across the planet? https://tradingeconomics.com/united-states/money-supply-m1 https://tradingeconomics.com/united-states/money-supply-m1

CJefferson 6y ago
I was just considering inflation that people see "on the street". By including M1, aren't you including fractional banking? If that is so, if bitcoin became "standard currency", banks would just fractionally bank bitcoin.
- BelenusMordred 6y ago
  Even if you are using CPI as monetary "inflation", it's still far below the CPI target of every developed economy on Earth. Do think M1 is the more accurate measure here because the amount of bitcoin in circulation is the equivalent of M1 as defined by everyone: "currency in supply". https://en.wikipedia.org/wiki/M1_(money_supply_measure) https://en.wikipedia.org/wiki/M1_(money_supply_measure)
jrek 6y ago
Growth in money supply =/= inflation. If price stability is what you want then the money supply has to increase as production increases to avoid deflation.
- BelenusMordred 6y ago
  It's certainly the meaning in some contexts. The problem with the word is it is widely used for consumer price inflation. When talking about asset and monetary inflation people still shorten it to simply "inflation" Growth in money supply is the proper way to compare to different monetary systems like bitcoin and the dollar. > to avoid deflation Last I looked nearly every person on Earth wants price deflation in food/electricity/cars/iphones/etc. The onus on you here to show why that is such a bad thing for society?