- snip -
The hard cap on the number of btc is a big mistake because it will ultimately be very deflationary.
Saying it is a "mistake" implies that the result in unintentional. Bitcoin is intended to be deflationary ultimately. This may make it an interesting experiment with the concept of a highly divisible deflationary currency, but it doesn't make it a mistake.
BTC supply has a halflife due to loss. I don't know what that halflife is, but it is a statistical fact. Therefore mathematically, the number of usable btc's will one day be practically zero.
The statement that "the number of usable btc's will one day be practically zero" is based on an assumption that bitcoin will never be divisible beyond 0.00000001 BTC. If we assume that sometime in the next few hundred years the users of bitcoin will agree to subdivide bitcoin further, then the number of usable fractions of a bitcoin become essentially infinite.
The currency will of course be unusable before then due to scarcity. There is no way around it. People will grow old and die without divulging their keys. People will lose or forget their keys. Computers will fail and lose keys. Just like people thought at one time we will never run out of IP4 addresses, the day will come.
Explain why it would be unusable due to scarcity? Scarcity will increase it's value, but it should still be useable.
It doesn't matter that btc's are divisible to the nano btc. That's not the point. The point is to have a money supply remain constant in ratio with the population.
That is not the point of bitcoin. The point of bitcoin is to create a currency that is inflationary in supply during it's adoption phase, and then transition to having a shrinking supply in ratio with the population.
This can't be done with a hardcap. The halflife due to private key loss exacerbates this problem.
Agreed. This is well known and intentional. That doesn't make it a problem.
I didn't even get into the fact that new, sustained wealth created by innovation or labor needs to be represented by fresh currency issue to prevent deflation.
Or everyone can simply accept deflation, and then new, sustained wealth created by innovation or labor needs to be represented by dwindling currency suply to prevent inflation.
Inflation and deflation are 2 sides of the same coin. Both are bad for participants in the economy, through no fault of their own. Either way, some sectors of the economy benefit unfairly and some suffer unfairly. You can't say that deflation is good and inflation is bad. It doesn't work like that. They're both bad. The changing itself of the value of money up or down as the change works its way unevenly through the economy is what hurts people.
This is an interesting opinion, but I think you'll find that many here will disagree with it.