Quote from: ArmoredDragon on April 07, 2013, 05:19:33 PM

I'm not an economist either, but I don't believe that BTC will see a steady rate of inflation like a traditional fiat currency. I think instead it will simply behave like gold did prior to the 70's where it retained a relatively stable value for over 300 years. The only times in history that the value of gold changed was following the discovery of the Americas (where it saw brief inflation) and then in the 70's when it became a commodity (for the first time ever, we were using gold to create stuff other than luxury items and coinage, such as computer chips.) Like other commodities, gold is now subject to periods of inflation and deflation. Right now gold is in a bubble in my opinion and is not worth diversifying into.

BTC will probably see wild variations in price until all blocks are mined AND anybody who is interested in BTC will already have a stake in it, even if a very small one. Keep in mind that not everybody will want or even be able to obtain a stake in BTC due to the barriers for doing so (e.g. needing a computer with access to the internet when exchanges are needed). At that point, BTC won't be a good idea for investment, rather it will simply become a medium of exchange. Good investments yield dividends or interest.

Yeah we agree, it won't have a steady rate of inflation like traditional currency. I was explaining what I understood of inflation/deflation. More bitcoins being created means monetary inflation, because that's the definition of monetary inflation afaik.

Sander

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