₦airaland Forum

There is a problem with limiting any currency to a certain level, and if Bitcoin were a currency like any other, it would probably be in a death spiral.

https://www.vuitweg.tech/2020/05/bitcoin-moeda-deflacionaria.html.

In economics, general theory suggests that the money supply must increase or decrease in order to match the need for money in the economy. If there is more economic activity, there needs to be more money in circulation; if there is less economic activity, there must be less money in circulation.

The reason for this is to guarantee price stability.

In the world's fiduciary systems, central banks use a variety of mechanisms to adjust the money supply. It can be argued that central banks are not very good at this, as almost all of them generate some inflation in the money supply beyond what the economy needs, which means that the prices of goods gradually increase and purchasing power decreases.

When there is inflation, rational people are not attached to money because it is losing value. Instead, they invest money in land, gold, Bitcoin, stocks, bonds or other things.

At some times in history, economies saw deflation in the money supply. The Great Depression was one. When there is deflation, money becomes more valuable. Commodity prices start to fall. When there is deflation, rational people spend their money because its value is going up. They don't invest. They sell other assets, like stocks.

Bitcoin is, now and in the long run, a deflationary currency. The money supply is not increasing with demand or economic use, so the value of money is going up. This means that people are holding Bitcoin instead of using it or investing it in other things.

This is a very simplistic explanation and, if you are interested, I encourage you to read about economics, Bitcoin and money supply.