<p>Found an article highlighting how inflation "impoverishes wealth generators"...</p>

<p><a href="https://mises.org/wire/central-banks-shouldnt-fight-deflation" rel="nofollow noreferrer">https://mises.org/wire/central-banks-shouldnt-fight-deflation</a></p>

<p>which is not written with cryptocurrencies in mind, but does talk about "creating money out of nothing", which is kinda how most cryptocurrencies begin, but just like how physics equations break down at t=0 (start of the universe), once established and being used as a currencies, the deflationary monetary policies of cryptocurrencies appear to generally be a good thing.</p>

CC BY-SA 4.0
2019-03-28T13:35:56.077Z
2019-03-28T13:35:56.077Z
Ninjanoel
<p>Wikipedia lists <a href="https://en.wikipedia.org/wiki/Deflation" rel="nofollow noreferrer">Deflation</a> as a bad thing, but I'm assuming that the article makes the assumption that the currency is a fiat currency (as opposed to cryptocurrency). I understand the general principle of deflation being a bad thing, especially if the government in question is actually printing more money as governments are want to do...</p>

<p>The Wikipedia article does make a good point about debt, as most newly printed money (as I understand it) is loaned out for interest to local business etc to allow for proper growth of the economy, and during deflation, debt increases in value, which is the opposite of what is usually happening in modern society.</p>

<p>But my question is regarding cryptocurrencies that are not issued or controlled by governments. Do the same factors (or others) mean that once, for example, all bitcoins have been 'mined' that the supply will be fixed and deflation will begin... how would that be a bad thing?</p>

<p>This question is not a duplicate of "<a href="https://economics.stackexchange.com/questions/21763/is-any-aspect-of-the-cryptocurrency-adoption-violating-a-widely-held-economic-te">Is any aspect of the cryptocurrency adoption violating a widely held economic tenet?</a>" because this is a focused question asking about a specific part of how cryptocurrencies work and whether or not "deflation" is still bad given the context in which cryptocurrencies are created and used. </p>

<p>Are upper limits to the amount of circulating 'units' bad, and should cryptocurrencies change their monetary policies to avoid the pitfalls of defaltion? </p>

CC BY-SA 4.0
2019-03-22T20:51:16.987Z
It depend whether bitcon will be used as actual currency or not. If it's only going stay a [speculative investment asset](https://www.economist.com/leaders/2017/12/16/bitcoin-is-a-speculative-asset-but-not-yet-a-systemic-risk), it's deflation/appreciation will be irrelevant except to investors in it.
fantastic peace and prosperity
CC BY-SA 4.0
2019-03-22T21:04:49.043Z
And given  flimsiness of the system, approximately 13-18% of that theoretical total of 21m have been [lost forever](https://www.economist.com/finance-and-economics/2019/02/09/what-happens-when-your-bitcoin-banker-dies), it seems. So in this sense you could have "deflation" as more coins are lost. Not that it really matters in terms of its price, which seems entirely driven by the greater fool theory.
fantastic peace and prosperity
CC BY-SA 4.0
2019-03-25T09:47:31.617Z
@Fizz it IS being used as currency by many, I personally don't hold much bitcoin because of all the things that I want that only bitcoin or another cryptocurrency can buy right now, Venezuela and Japan both recognise crypto as official money now.
Ninjanoel
CC BY-SA 4.0
2019-03-25T09:58:37.717Z
Possible duplicate of [Is any aspect of the cryptocurrency adoption violating a widely held economic tenet?](https://economics.stackexchange.com/questions/21763/is-any-aspect-of-the-cryptocurrency-adoption-violating-a-widely-held-economic-te)
fantastic peace and prosperity
<cryptocurrency><deflation>
Effect of a Deflationary Cryptocurrency
Ninjanoel
# Effect of a Deflationary Cryptocurrency

(Asked by: username_0 on 2019-03-22)

Wikipedia lists [Deflation](https://en.wikipedia.org/wiki/Deflation) as a bad thing, but I'm assuming that the article makes the assumption that the currency is a fiat currency (as opposed to cryptocurrency). I understand the general principle of deflation being a bad thing, especially if the government in question is actually printing more money as governments are want to do...

The Wikipedia article does make a good point about debt, as most newly printed money (as I understand it) is loaned out for interest to local business etc to allow for proper growth of the economy, and during deflation, debt increases in value, which is the opposite of what is usually happening in modern society.

But my question is regarding cryptocurrencies that are not issued or controlled by governments. Do the same factors (or others) mean that once, for example, all bitcoins have been 'mined' that the supply will be fixed and deflation will begin... how would that be a bad thing?

This question is not a duplicate of "[Is any aspect of the cryptocurrency adoption violating a widely held economic tenet?](https://economics.stackexchange.com/questions/21763/is-any-aspect-of-the-cryptocurrency-adoption-violating-a-widely-held-economic-te)" because this is a focused question asking about a specific part of how cryptocurrencies work and whether or not "deflation" is still bad given the context in which cryptocurrencies are created and used.

Are upper limits to the amount of circulating 'units' bad, and should cryptocurrencies change their monetary policies to avoid the pitfalls of defaltion?

**Tags:** cryptocurrency, deflation

> **Comments:**
> **username_1**: It depend whether bitcon will be used as actual currency or not. If it's only going stay a [speculative investment asset](https://www.economist.com/leaders/2017/12/16/bitcoin-is-a-speculative-asset-but-not-yet-a-systemic-risk), it's deflation/appreciation will be irrelevant except to investors in it.  
> **username_1**: And given  flimsiness of the system, approximately 13-18% of that theoretical total of 21m have been [lost forever](https://www.economist.com/finance-and-economics/2019/02/09/what-happens-when-your-bitcoin-banker-dies), it seems. So in this sense you could have "deflation" as more coins are lost. Not that it really matters in terms of its price, which seems entirely driven by the greater fool theory.  
> **username_0**: @Fizz it IS being used as currency by many, I personally don't hold much bitcoin because of all the things that I want that only bitcoin or another cryptocurrency can buy right now, Venezuela and Japan both recognise crypto as official money now.  
> **username_1**: Possible duplicate of [Is any aspect of the cryptocurrency adoption violating a widely held economic tenet?](https://economics.stackexchange.com/questions/21763/is-any-aspect-of-the-cryptocurrency-adoption-violating-a-widely-held-economic-te)  

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## 1 answers

### Answer by username_0 on 2019-03-28. Score: -1 | Accepted answer

Found an article highlighting how inflation "impoverishes wealth generators"...

<https://mises.org/wire/central-banks-shouldnt-fight-deflation>

which is not written with cryptocurrencies in mind, but does talk about "creating money out of nothing", which is kinda how most cryptocurrencies begin, but just like how physics equations break down at t=0 (start of the universe), once established and being used as a currencies, the deflationary monetary policies of cryptocurrencies appear to generally be a good thing.


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