Quote from: whitslack on December 13, 2012, 03:08:08 PM

A clarifying note: These charts show the monetary (supply) inflation of Bitcoin. They bear no relation to price inflation, which is an entirely distinct phenomenon. When Austrian economists say "inflation," they're typically referring to monetary inflation, whereas Keynesian economists are typically referring to price inflation.

Also, please note that the top axis ("Year") on these charts is approximate, based on the scheduled block generation rate of one block per 10 minutes. The actual block generation rate has averaged a bit faster than this, due to the perpetually increasing hash rate, so we're already a little bit further progressed than the labels along the top axis would suggest. This doesn't mean there will be any more than 21M bitcoins; it only means that we'll reach the end of supply generation a little bit sooner than we would have if the hash rate had always held constant.

http://www.mattwhitlock.com/Bitcoin%20Inflation.png

Bitcoin Inflation 4x3.pdf (8"×6") | Bitcoin Inflation.pdf (8½"×11")

http://www.mattwhitlock.com/Bitcoin%20Inflation%20logarithmic.png

Bitcoin Inflation logarithmic.pdf (8"×6")

Permission given to use and reproduce freely.

The price of bitcoins will change over time, and nobody has a crystal ball that can predict the price, but its generally expected that the price of Bitcoin will increase over time. Because some economists refer to inflation as a rise in price, the terms for inflation can be quite confusing sometimes, but in this case, inflation is being referred to as monetary inflation.

Price inflation is a different matter, however, as Bitcoins price will go up or down by an unknown amount due to market forces. Because Bitcoin is divisible to eight decimal places, its also possible to send people as little as a single Satoshi, which means Bitcoin can operate as a low-cost currency or a high-cost currency, the potential uses are quite broad.

Bitcoins price is subject to price inflation as prices and demand are shifting every day, but monetary inflation is less likely to happen because of Bitcoins fixed supply.

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