Yes, sort-of, the supply grows by a fixed absolute quantity every year. I don't really consider it to be a serious attempt at a useful cryptocurrency though.

I suspect any coin attempting price-stability (minimum requirement for a useful currency) would need some kind of central bank to control and guarantee the supply. (We have that already too! It's called Tether and it ain't great.)

> I don't really consider it to be a serious attempt at a useful cryptocurrency though.

was being widely used for tipping when the lightning network was just a twinkle in btc's eye

seems to have declined for that purposed, but was the reason i have a small bag still. maybe missed my chance to sell at $0.70 but my original $70 bag i got to tip an openra server ended up doing quite nice ;)

someday my doge will hit $1

Dogecoin is a copy+paste of bitcoin with a few config values changed.

That's why it shares the inflationary model.

The reason bitcoin is often described as deflationary is that many coins are lost, and the inflation is somewhat priced-in.

How is Bitcoin inflationary? Even without coin lossage (a ridiculous concept in any other financial system, short of literally setting your money on fire), the network is programmed to eventually stop minting coins. Fixed supply on increased demand (if it’s the economic substitute we’ve all been promised) is the precondition for deflationary movement. No amount of “pricing in” changes that.

Even if we assume a fixed global supply of bitcoins (which is a big assumption because it assumes bitcoin deposits at institutions will always be backed by full reserves), that doesn't mean that the supply of bitcoins in a particular economic area will be fixed. It most certainly won't, unless international trade stops.

> which is a big assumption because it assumes bitcoin deposits at institutions will always be backed by full reserves

Where is this assumption coming from? I have never heard this before.

> that doesn't mean that the supply of bitcoins in a particular economic area will be fixed. It most certainly won't, unless international trade stops.

Putting non-competing sectors of the economy in competition against each other for a slice of a fixed monetary supply is another basic and sufficient precondition for deflation. There’s a very good reason we don’t do that currently.

> Where is this assumption coming from? I have never heard this before.

The global supply of bitcoins is fixed if and only if financial institutions are not allowed to hold fractional reserves against deposits.

Maybe I’m missing something obvious here, but it’s not clear why (1) any bank would offer a Bitcoin denominated account, or (2) how it even makes sense to perform fractional banking against Bitcoin. You can’t change the underlying amount in the ledger and the ledger is the value source, unlike physical Federal Reserve Notes.

Well, crypto-exchanges already offer deposit accounts backed with reserves. If at any point the reserve ratio falls below 1 (we don't know if this has already happened), the quantity of bitcoins in circulation will increase as a result of that.

I know of some cryptocurrency exchanges that offer stablecoins, which are a dollar-denominated asset that’s (theoretically) backed by cash in the bank. We’ve seen plenty of evidence that the largest stablecoin players are actually fraudsters.

I don’t know of any exchange that offers a deposit account that’s dollar-denominated but backed by cryptocurrency. I can think of lots of reasons for that, FDIC regulations being the least of them. But again, even that wouldn’t make the number of bitcoins in circulation increase: it would be an unstable (and illegal) financial fiction.

I'm talking about bitcoin-denominated accounts backed with bitcoins. These are the standard exchange accounts that most people have.

Okay. In what world would any retail consumer accept a Bitcoin-denominated account based on marginal Bitcoin reserves? Exchanges would be forced to purchase on the open market to meet their withdrawals during demand, which would cause another deflationary spiral. It’s a nightmare scenario with no conceivable upside compared to actual currency.

And again, this is before we get to the problem of “the government lets you do this.”

I don't think you're following me. This isn't some hypothetical scenario. It's common for people who own bitcoin to have their bitcoins deposited at some exchange. Since exchange customers are unlikely to withdraw all their bitcoins simultaneously, exchanges don't have to keep 100% reserves. For instance, they can lend out some of the reserves, or they can use them for whatever purposes they want. When this happens the quantity of bitcoins in circulation goes up. To all effects and purposes, new bitcoins have been created and put in circulation.

I hope that I'm not following, because what you just described is both crazy and illegal.

Cryptocurrencies are currently considered securities under US law. You can't just pop unrealized securities into existence when a prospective investor asks you for them: it's akin to naked shorting. That's why the stock market has "market makers," i.e. firms that provide low-latency settlement of securities in exchange for a small part of the spread.

I can't find any evidence online that any reputable exchange is using its underlying reserves to cover multiple in-kind balances. If you have links to exchanges actually doing this, both I and the SEC would love to see them.

Edit: I'm struggling to even find links to people discussing this hypothetically online. I found this one on a wiki[1], where it's discussed in the abstract. And I found another thought piece from the Atlanta Fed[2]. But no indicator that any current above-board reserve is currently doing this.

[1]: https://en.bitcoin.it/wiki/Fractional_Reserve_Banking_and_Bi...

[2]: https://www.atlantafed.org/cenfis/publications/notesfromthev...

It can be crazy, in your opinion, but the fact is fractional reserve banking has been a standard practice in banking since the invention of banking. I don't know of any country where it's illegal. Whether it would be legal for crypto-exchanges, which typically don't have a banking license, to engage in fractional reserve banking I don't know. Even if it was illegal in the US, it could be legal in Cayman Islands, or elsewhere, and the result would be the same—an inflated supply of bitcoins circulating around the world. Also a lot of exchanges don't seem to be regulated at all. The ones that are regulated could just get a banking license.

Fractional reserve banking isn't the crazy or illegal part. It's not crazy or illegal because it makes sense in the context of currency, where the purpose is denominational value and facilitating value transfers. The crazy and illegal part is the idea of "fractional reserves" in the context of a fixed-supply security. There's no such thing.

I used the US as an example; what you're describing is illegal on every single major international exchange[1]. And as far as banking licenses go: the FDIC won't touch Gemini's actual non-third-party-custodial depository products with a ten foot pole, and they're about as clean as a cryptocurrency firm can be.

If you want cryptocurrencies to "succeed" in some nebulous sense, it would be good to get a start on the "not just good for crime" part of the equation. This isn't it.

[1]: https://en.wikipedia.org/wiki/Naked_short_selling#Regulation...

Yeah, well that's your opinion. I don't think that you know what you're talking about. At any rate, my point isn't about whether crypto-currency deposits backed by fractional reserves are legal or illegal. My point is that the idea that there is a fixed supply of bitcoins is a lie, a marketing narrative to fool gullible idiots into thinking that the price of bitcoin can only go up. And my answer to that is to say that is 1) it's not true that a limited supply ensures that the price can only go up, and 2) it's not true that the supply of bitcoin is fixed, because financial institutions can create additional bitcoins via fractional reserves, and because as a consequence of international trade the supply of bitcoins in different economic areas would fluctuate (sometimes wildly) creating periods of inflation and deflation, just like it happened during the gold standard.

It’s an argument of semantics, really: if it will eventually stop printing coins, I’d consider it inflationary until that point in time and non-inflationary thereafter. In practice, current holders are being diluted to subsidize the security of the network.

This isn’t consistent with the “priced in” position put forward by the original commenter. An asset class that is going to be fixed in quantity for the rest of time is an obvious target for pricing-in.

By that logic the USD has some inflation baked in too, it’s just that in Bitcoin’s case the number is exact and in USD it’s a guess. It’s really just arguing semantics, though. I get both sides’ arguments.

I don’t know about “baked in,” but of course the USD is inflationary: that’s been the explicit Fed policy for decades. It’s been the policy because small amounts of inflation have a measurable economic benefit.

But again: this doesn’t change the fact that Bitcoin is deflationary. It’s a fixed supply of coins on a ledger that every current stakeholder has a strong deflationary interest in. The fact that there might be inflationary forces internal to Bitcoin’s economy doesn’t change that.

I only meant that coins are still being created for now, so the proportion of coins that a specific person owns vs the total is constantly falling, like in any inflationary currency.

If you measure current ownership as a percentage of final issued coins rather than current issued coins, then you've already priced in the inflation.

That's an internal inflation effect, one that appears to have been amply priced into the current value of Bitcoin. Which is perfectly reasonable, since everybody can see that the future quantity of Bitcoin is fixed and/or diminishing, thanks to lossage.

In other words: like the US economy, Bitcoin can have both inflationary and deflationary forces internally. But the overall economic picture of Bitcoin is intrinsically deflationary.