I have to disagree, the main marketing point for BTC economy is it's capped 21M, nobody knows what is the current supply unless they google it, and nobody even cares about it, the same concept of the 21M max supply has been in play since bitcoin's inception, I have yet to see anyone who invests into bitcoin because it's current supply is 19.x M.
That is because people have the perception that Bitcoin is capped at 21Million,
and there is no tax. Your 1BTC today is 1BTC in 10 years, and Bitcoin is taken to be deflationary specifically because of that. A tax has an equivalent inflationary impact in that regard. The economics and the math would say otherwise, a generalization of the population would make any price movement inaccurate. I, for one wouldn't invest in a currency that has a tax, precious metal don't disappear when I keep them in the vault.
I don't think that would make BTC unsuccessful, in fact, I do think that the number of transactions is going to enter a downtrend at some point, despite BTC gaining more popularity and users, BTC seems to work better as a store of value than a medium of exchange for daily usage, the more value it gains (vs other goods) the less it will spent, I think in 5-10 years transactions will be close to flat, everyone will be buying it to store, so the average user who makes 1 transaction a day will likely only have 1 transaction a year or so.
Then unfortunately that is not what Bitcoin is designed for. Bitcoin should be a transaction method, for which it was defined in the whitepaper and the progress that we've made with regards to scaling has pointed to that. Bitcoin is not a speculative asset and it would be dangerous for Bitcoin to go down that path.
Ya pretty much as what ranochigo said, it depends on how you want to interpret it, you guys are looking at it from a personal perspective and the effect on the user individually, I look at it as a global effect on the whole currency, while the numbers are the same, the effect is likely to be a lot of different, especially if the fee is very low, say it's 0.1% a year on all coins, by doing this you maintain one of the most aspects of BTC economics which is the finite supply, going beyond 21M even with 0.1% coins a year will take away the concept, so the difference between circulation 0.1% and injecting new 0.1% supply is pretty large, its the difference between finite and infinite.
When miners take 0.1% of your coins it doesn't make Bitcoin less scarce, the scarcity of bitcoin remains the same regardless of the fact that you now own a little less of it, when you create 0.1% out of thin air and give it to the miners, every block that passes affects the scarcity of the coin, the effect this could have on it's value is probably going to be more than fee which you could otherwise pay to the miners just to keep that 21M cap.
It will definitely be very different, but both of it amounts to inflation. Inflation works in a very simple manner, which is what o_e_l_e_o described, for a store of value to be worth less than before. Injection of the funds actually is better, because you have to compensate for the lost coins that can never be recovered. However, if in the long run, you are always recovering the lost coins with your schemes, and thus inflation is always >0. The scarcity of Bitcoin if it is:
100 BTC growth but 50 BTC lost is better than
0 BTC growth but 50 BTC recycled per year.
That is what economist and quants are looking at when deciding on the viability of economies.
The issue is that the recirculation is infinite, which means the wealth is always being redistributed, which increases the inequality that you're already observing.
Actually, if you compare it to the actual tax that we have in the government. People who are holding less are affected deproportionately, and you end up in a scenario whereby miners are always far, far richer and we are always getting poorer. Counterproductive for what Bitcoin set out to do, taxation is crime.