Post
Topic
Board Economics
Re: The deflationary problem
by
Sweft
on 12/04/2013, 13:51:24 UTC
So your saying you expect it to stop?  I find little evidence that it will ever stop, the continual halfing every 4 years of mining rewards clearly points to a about ~20% deflation per year over the long term as the price of BTC must rise to keep mining profitable.
Not necessarily. Fees can rise, as well.

Once we get closer to market saturation, and have a better developed economy - by which I mean more goods and services valued directly in bitcoin - we'll see a lot smoother price movements.

I already addressed this issue, please read the thread.

Fees are capped at 100% so increasing fees cannot support exponential growth.

You have three means to secure the network once bitcoin becomes deflationary.

1) exponential growth of velocity which is almost impossible given the deflationary nature.
2) exponential growth of price which would lead to hoarding and less coin velocity
3) mining at a loss of profit to protect the network and your coins

All of these are situations are irrelevant given moderate inflation.  Inflation supports network hash by supporting mining profits