BTC Reddit Mentions | ChartExchange

This can get long very fast, but let’s try to oversimplify:
Let’s look at the opposite of inflation, deflation. Assume money would gain in value, instead of losing value. What would you do? You’ll probably say: save more, spend less. And that is a problem, because when people are unwilling to spend money, demand for products and services goes down. Factories have to cut production, service providers have to reduce their services, ultimately lay off people or cut their wages. More people are unemployed, they spend even less because they no longer had money to spend. This can spiral out of control quickly.
Another issue with deflation is: most people cannot buy a house outright. They have to take a loan. With deflation, their loan becomes more expensive with time, which is bad…
Hitting exactly zero inflation is difficult, but even you could, having inflation has its benefits: people don’t want to just hold on to their money, it would become worth less over time. So they do something else with it. Usually invest or spend. Spending is great, increases demand, more workers are needed, unemployment goes down. Companies want to take loans so they can invest, since the loan depreciates over time. Same goes for homeowners whose loans become cheaper and cheaper (inflation-adjusted) over time.
Since with moderate inflation, people like to spend money, employers need more people. What happens when workers are in high demand? Right, they can choose where they want to work, and employers will be willing pay more to.
The key is: that inflation must be low enough that wages can increase in the same way. If inflation becomes much larger than wage increases, people effectively have less and less money for buying the things they need, and have less to spend on other things (see above).
If you have say 2% inflation and an average of 2% wage increases, that is not only sustainable but also kind of optimal: it encourages people to spend or invest their money, both create jobs and stabilise the economy, and the wages are stable, value-wise. Also, it makes sense for both businesses and homeowners to take loans, because the loan will decrease over time, the money borrowed can be invested (which again, keeps the economy going).
Without inflation, you have stagnation. People just keep their money and don’t do anything with it. You can see it in this sub, so many people advocating for never selling Bitcoin. If Bitcoin would be our main money, that would be a problem.
Inflation becomes problematic if it becomes too big. If inflation becomes greater than wage increases, it just becomes a kind of tax, essentially.
The idea of Bitcoin of not allowing uncontrolled inflation is a good one. But zero inflation is the wrong choice. I would argue that a constant 2% annual increase in supply would have been a better design choice.
This would also solve another issue: the halvings have been significant in the beginning, and no longer are significant for the Bitcoin price (this is natural since the effect gets lower from halving to halving, and it’s not a problem). Yet people still seem to believe halvings are significant because they have been in the past.
In fact, at some point, no new Bitcoin will be issued through mining and mining rewards will all be transaction fees. This is an unnatural transition in the design (albeit smoothed because rewards/supply increases are reduced slowly). Keeping the supply increases constant at a fixed level would have been a cleaner design.
If you look at the current supply increase, btw, which is around 165k BTC per year, at 19.5 million of BTC in circulation, that’s a supply increase of a bit less than 1%. Before the last halving, it was closer to 2%, which is arguably close to ideal. You could argue - but I have no evidence for that - that this contributed to Bitcoin doing so exceptionally well in recent years.

.dark-mode .W86jyZ{ color: white; background-color: #333333; border: 2px solid white; }.light-mode .W86jyZ{ color: #333333; background-color: white; border: 2px solid #333333; }BTCUSDT20240724P68500Bitcoin / Tether USD Jul 24 2024 68500.00 Putcrypto

BTCUSDT20240724P68500
Bitcoin / Tether USD Jul 24 2024 68500.00 Put
crypto