this post was submitted on 02 Nov 2023
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But with a hard coded money supply, you cannot control inflation. The inflation won't be in terms of dollars, it'll be in the number of coins required to buy whatever, you know like how inflation doesn't make euros less valuable versus dollars, it makes euros less valuable versus bread
First off, let me say that I am no monetary expert. Now, with that said, once something like Bitcoin hits its 21 million cap, there will never be any more Bitcoin. So wouldnt thar be deflationary due to lost coins, etc? Now in this case it can be argued this is a bad thing because miners need fees to secure the network. If there are no more coins being released to secure the network, then fees will have to make up for it, and that could drive the cost to transact up, which would be a bad thing. Something like Monero takes another route where 0.6 new Monero will always be released, but that the inflation is asymptotically 0 because that new 0.6 Monero makes up less and less of the entire supply over time. This would allow for the replacement of lost coins as well so that one coin doesn't become infinitely valuable.