Quote from: AntiVigilante on June 06, 2011, 06:14:49 AM

The 21 Million will never be reached. It will never run out. We will simply drift over a few decimals.

Bitcoins (Satoshis) are integers, so unless all client implementations agree (not to fork and) to floating point (or rather retro-integer expansion), the 'division' is a bit shift: 50 * 01000 .. 00100 .. 00010 .. 00001 .. 00000

Code:

int64 GetBlockValue(int nHeight, int64 nFees) {
   int64 nSubsidy = 50 * COIN;
   // Subsidy is cut in half every 4 years
   nSubsidy >>= (nHeight / 210000);
   return nSubsidy + nFees;
}

I'm not an economist, but it seems to me, many people are confusing the terms inflation and money supply. While one is a function of the other, it is the function itself and its management that the different schools argue about.

The bitcoin money supply is inflating (infinitely on the first day) and less than 50% today. However the number of participants is also inflating, but at a faster rate. Thus on balance the number of bitcoins that can be obtained in exchange for most goods and currencies are deflating and will continue to do so as long as the number of participants increases. But unlike a ponzi/pyramid scheme, new participants are not paying earlier participants, only increasingly demanding a relatively decreasing supply.

There are 6.6 Mbtc today and about 3 Mbtc more next year. So, roughly 35% this year, 25% next, and (after 1.5 Mbtc per year), less than 10%, until the money supply inflation is negligible (back of napkin math).

While eventually we may want a stable currency, deflation is a necessary bootstrap. If bitcoins were stable, few would buy today in expectation for the future. And few of us would have heard about bitcoins if it inflated even a basis point per year. It is *ONLY* because I think that bitcoins will be very useful in the future that I'm willing to bet on it today.

People who think the early miners have an unfair advantage seem not to have considered whether anyone would purchase the coins today if it were not deflationary. Bitcoins are no more a ponzi/pyramid scheme than any other great but risky idea or service whose price increases with popularity, such as concert tickets or the dating game. Any limited resource with expanding demand will deflate. We may not like the House of Saud, but our ideologies have not reduced our consumption of deflationary oil. Is carbon trading a pyramid scheme?