On Wed, May 29, 2013 at 10:31 AM, Charles Curley
<[email protected]> wrote:
> On Wed, 29 May 2013 09:58:42 -0600
> Levi Pearson <[email protected]> wrote:
>
>> As more bitcoins are mined, it becomes more computationally expensive
>> to mine new ones. You can, theoretically, run mining software on a
>> standard CPU but it's quickly reaching a point where the electricity
>> required to mine bitcoins via standard CPUs outweighs the value of the
>> bitcoins mined. Soon, the FPGA-based devices will be worthless as
>> well.
>
> Sounds like inflation to me.
No, it's deflation. There is a fixed amount of currency (bitcoin)
that can theoretically be mined, so it gets exponentially more
difficult to mine it as time goes on. So the value of an individual
bitcoin increases over time, at least as long as they are deemed
valuable as a currency.
If there was a fixed difficulty level for mining a bitcoin, then we
would be seeing the value of individual bitcoins drop as the number of
them in circulation increased exponentially as more and more people
mined them with more and more powerful devices. That would be
inflation.
Inflation and deflation speak about *prices*, not directly about
currency value. If the value of your currency goes up, then as a
result prices in terms of that currency will drop, thus deflation. If
the value of your currency goes down, prices go up, and there you have
inflation.
--Levi
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