the flaw of bitcoin lies within its supply cap
I thought this is what it makes it different unlimited fiat supply of central banks...?
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the flaw of bitcoin lies within its supply cap
I thought this is what it makes it different unlimited fiat supply of central banks...?
Since future demand is unknown it puts the entire security model at risk as block rewards halve every 4 years. The way to fix this is minimum necessary issuance model then burning the supply based on demand (fees).
A superior economic model emerges this way.
decreasing supply > fix supply
A small but steady rate of inflation is needed to ensure longevity and stability of any currency. Over time currency will be lost and you need a certain amount of inflation to counteract that loss.
Just as cash is lost or destroyed over time, people will lose bitcoin wallets or send coins into the void.
We know that around 4 million bitcoin is already lost, 2.9 million if Satoshi never lost their early keys, which means bitcoin's functional cap has already been reduced to ~17 million.
Optimal inflation is equal to or a hair higher than loss so that your real inflation rate is near zero. Bitcoin may end up needing to hard fork at some point to remove the hard cap to keep a small amount of inflation. If they don't than the currency is doomed to fail.