I think that the BTC:$ ratio will continue to increase (9:1->10:1). BTC has increased in value among Bitcoin advocates and users, and the dollar is simultaneously loosing subjective value, albeit at a slow rate.

Further, as people trade Dollars for Bitcoins, the supply of Dollars will increase (duh!), and the 'price' or value of dollars will decrease. That is price inflation, which is consumer-driven inflation; monetary inflation occurs when the issuer of the currency dumps more of the currency on the open market. Difference lies in who is dumping, though monetary inflation is much more arbitrary than price inflation, because the market drives price inflation/deflation whereas a single entity drives monetary inflation/deflation.

As people generate Bitcoins, the supply of Bitcoins will increase (duh!), thus the 'price' or value of Bitcoins will decrease. However, monetary inflation and price inflation are essentially conflated when it comes to Bitcoins, as anyone can generate (or issue) and trade Bitcoins.

However, I predict that the subjective value of Bitcoins will increase, even though the supply is increasing, because I believe that more and more people will embrace Bitcoin for more and more trading purposes, namely those that are doing the heavy mining. Those miners gotta spend their Bitcoins sometime. Thus, the 'price' of Bitcoins should become more and more stable as more and more people trade for Bitcoins and generate Bitcoins.

If people stop generating Bitcoins, then BTC may experience deflation; it depends on how much value people put in Bitcoins after generation peaks. If people stop trading Bitcoins, then BTC will become absolutely worthless because they will dump BTC for $ (or whatever). If Bitcoins are dumped, then the ratio of BTC:$ might just flip, depending on the relative subjective value of Dollars and the relative subjective value of Bitcoins. However, a generation peak does not necessarily mean that people will dump Bitcoins. OTOH, deflation will eventually kick in, and prices will necessarily fall, assuming that more and more people continue to embrace BTC.

I am very excited to see what will happen to Bitcoin.

orthzar

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