Quote from: fastandfurious on December 13, 2011, 08:33:08 AM

Quote from: chickenado on December 13, 2011, 08:24:39 AM

high inflation? 25% APR is tiny considering how new bitcoin is. Most disruptive technologies fail. But the ones that don't fail, usually grow a lot faster than 25% APR in the first few years.

Bitcoin today is not that tiny. The total market cap of Bitcoin is around 24 million dollars at this exchange rate. And the inflation is 33% not 25%.

That is tiny compared to global economy (or even a local economy). Hell it is small compared to just the time value of those creating/development/running Bitcoin businesses (and services).

Currently (or at least in the past) the economy is/was growing at many magnitudes higher than 33%. The growth of money supply only results in loss of purchashing power IF the underlying economy is growing slower. Excluding speculation (and speculation would still exist even w/ no monetary growth) if Bitcoin economy grows 100% this year, the money supply grows 33%, and it was currently fairly valued we should expect the "price" of Bitcoin to rise 300%.

When the economy is very small it is very easy to grow by large %. I open a shop selling t-shirts. 1 per day. Some news story hits and by growth rates goes up 500% in a day. If I can turn that into a longer term growth trend maybe I end up w/ 20,000% growth the first year. Nike is never going to have 20,000% growth and as my T-shirt company gets larger it will never be able to sustain 20,000% growth either.

High monetary growth is only material if the economy is growing slower than the rate of monetary growth. If Bitcoin (at only really <2 years old) can't sustain 33% growth for a couple years then it has no future. If it CAN then by 2017 inflation is more like 4% per year. Obviously if Bitcoin is a 1 B economy it can't sustain 33% growth but it certainly can sustain 4%.

For the record when Bitcoin was 1 month old it had a (forward looking) monetary growth rate of 1200%.