Bitcoin monetary policy is well known and follows the rough distribution of new mining deposits where it gets more expensive to mine deeper as the project matures. We know exactly how many bitcoin will be created from now until the year 2140, unlike fiat currencies that are currently being printed and devalued worldwide with only short term gains in mind. The long term plan for fiat currencies is to devalue, as servicing debt and rising interest rates make the math impossible otherwise. Is Bitcoin the answer, who knows? But it’s looking like an open, permission-less, and international boarder-less system for money, (much like the properties that made the Internet grow rapidly from it’s start in the early 90s) will be the way to go.
Playing around with some calculations at current price levels (3/1/2017) ~1200 USD per Bitcoin.
~ $2,000,000 (2 million) USD in btc created each day, distributed as mining rewards.
~ 1215 days until the next halvening (daily reward goes from 1800 to 900) ~ June 26 2020
~ $2,430,000,000 (2.43 billion) USD created at current btc price of ~$1200 USD
So basically, $2.43 billion USD of wealth worldwide needs to flow into bitcoin in the next 3.3 years to maintain the price of ~1200 USD per year. When ~ June 26 2020 comes around, then the coin creation rate (inflation rate) will be reduced by 50% to 900 btc created per day.
The question then…is $2.43 billion from all fiat currencies and other assets able to flow into bitcoin to keep the price steady?
When you think about countries all over the world where their national fiat currencies are hyper-inflating (or even just inflating) then you start to wonder how much demand their is for a system that opts out of the fiat currency war race to the bottom.
THESE ARE YEAR OVER YEAR PERCENTAGE INCREASES! (180.9 means a ‘loaf of bread’ went from $2 to $3.6 in year!!!)
If your local currency is inflating at any of these rates, what do you do? You need to convert your local currency into something more stable as the purchasing power of your local currency is worth less in the future.