I have been learning about how central banks usually target 2% inflation for economic growth. Still, Bitcoin has a fixed supply and can even become deflationary over time if people lose access to their wallets.
So I'm interested to know about a few things;
Can Bitcoin work well in a deflationary environment where the value keeps rising and people prefer to save rather than spend?
Would an economy based on Bitcoin slow down because people won’t want to spend their BTC?
Or would it encourage smarter spending and long-term thinking instead of constant consumption?
I’m just trying to understand if Bitcoin can really replace fiat money while keeping an economy active, especially since deflation is usually seen as a risk in traditional systems.
Bitcoin should be considered more like gold than money. When there is uncertainty in economy people would surely turn to gold and bitcoin as they would always have a value regardless of what happens to the state or it's issued money. The world is moving towards a permanent economic slowdown. It's not that people don't want to spend or all they want is to save but it's that there are no good opportunities to invest. The interest rates on deposit are at one of its lowest yet people are keeping their money in the banks rather than investing as they know the market is slowing down.
Bitcoin on the other hand would get rarer, more so than gold and with its solid SHA-256 Hashing and UTXO Model there's no reason for people not to trust its authenticity.