Re:Professional Traders Show Interest in Bitcoin
by maaku on Monday April 02, 2012 @12:20AM
(#3786300)
> ...and meaning longer transaction confirmation times (for at most 2 weeks, while the network adjusts to the change in capacity)
To be clear, it wouldn't be two weeks. The network adjusts every 2016 blocks, which under normal circumstances would be approx. 2 weeks. Typically it's a little less as new hash power comes online, but in the case of a drastic loss of hash power, it could be much much longer than two weeks. We saw that with namecoin where it took almost half a year between adjustments (or would have, if developers hadn't intervened with merge mining).
Re:Professional Traders Show Interest in Bitcoin
by herge on Sunday April 01, 2012 @11:00PM
(#3786076)
Inflation is not directly proportional to the supply of money. If a bitcoin's value versus the US$ drops (as it has since June), there is heavy inflation as the price of goods and services (measured in bitcoins) goes up.
1) 'monetary' inflation will decrease, because the rate of bitcoin creation will drop from 7200BTC/day to 3600BTC/day
2) miners will be earning half as much when denominated in BTC
If the decrease in inflation doesn't cause a large enough corresponding increase in price, mining would be less profitable, causing some fraction of miners to drop out, and meaning longer transaction confirmation times (for at most 2 weeks, while the network adjusts to the change in capacity).
My guess is that the huge change in inflation will adequately compensate both miners and investors, and cause a significant enough increase in price to avoid lengthening confirmation time.
https://en.bitcoin.it/wiki/Controlled_Currency_Supply
EDIT: by inflation, I mean 'monetary' inflation, rather than price inflation.