To avoid inflation I have another proposal: demurrage.
The bitcoins created can lose value constantly in time so that the amount of bitcoins removed from circulation this way equals the amount created to pay the proof of work.
Obviously, the demurrage would be applied after some quantity of them are circulating (¿21M?).
The demurrage would have another benefits: suppressing interest, stimulating the circulation (that can prevent crises)...
I have posted about it here:
That is exactly what I suggested above. Bitcoins are added to the supply each time a block is solved (incentive to contribute CPU resources), but bitcoins erode each time they are transacted with. So, inflation is balanced.
The hard part IMO, is that you don't always want a balanced inflation. When the number of users of the ripple-bitcoin system is growing, you need more bitcoin liquidity. I have never believed in the built in deflation in bitcoin, it seems to me an unnecessary restriction.
So that hard part, is how the bitcoin-ripple money supply is automatically adjusted to grow with the volume of transactions, or equivalently, how a more or less fixed bitcoin velocity is maintained in this system of balanced demurrage and supply inflation.