I was thinking about how great bitcoin is vs combatting inflation but what about deflation?
Say bitcoin gets lost or if there was a malicious intent of destroying / hoarding bitcoin, are there any mechanics within bitcoin that address this?
Am curious but this is one of the largest problems i could think of if btc were ever widely adapted
12.5 new bitcoins are created and released into the economy every 10 minutes on average.
As such, the supply of bitcoin is currently
inflationary.
Over time, the amount of new bitcoins created will shrink (cut in half approximately every 4 years).
Eventually the number of new bitcoins created will be less than the number of bitcoins permanently lost or destroyed. At that point the supply will finally be deflationary.
With a deflationary supply, the price should be higher for any specific demand. As such, your bitcoins will have more buying power. You'll be able to buy the same amount of stuff with less bitcoins.
So, while the total number of bitcoins will shrink, the number of bitcoins that you'll need to spend to acquire something will also shrink. Therefore there won't be as many bitcoins needed. Instead of the 2 milli-bitcoins (mBTC) you'd need to spend for a BigMac today, you'll only need to spend 0.2 mBTC (or 0.02 mBTC, or 0.002 mBTC).
As the supply continues to shrink, the price should be even higher for any specific demand. Instead of spending 0.002 mBTC (which could be called 2 micro-bitcoins) on that BigMac, you'll be able to spend 0.2 micro-bitcoins or 0.02 microbitcoins.
Note that at that point we're talking about 1 bitcoin being worth $120 million. We're going to need a LOT of deflation before we get to that point. Perhaps a few centuries. It's extremely likely that bitcoin will be replaced with something newer and better before it gets to be 500 years old.