Comment by nosuchthing | Hacker News Reader

Comment by nosuchthing | Hacker News Reader

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Consider what happens when another software hack/bug is found in Bitcoin/Ethereum/cryptocoin client wallet software, allowing an attacker to double spend (rob exchanges/OTC trader/dark pools), or generate more BTC for free. This could be done by any of the few developers using obfuscation techniques. See how easy it is to hide malicious code even in open source projects, there's several underhanded obfuscation contests that demonstrate open source code can hide malicious backdoors even with vigilant audits.

A Bitcoin bug happened a few weeks ago allowing any attacker to generate infinite free BTC, but the network survived only because an honest researcher chose not to exploit it. [1]

  Constrained supply means protection against inflationist 
  central banks.

Bitcoin's inflation rate is higher than USD:

  The current inflation rate for the United States is 1.9% 
  for the 12 months ended December 2018, as published on 
  January 11, 2019 by the U.S. Labor Department.

  Bitcoin inflation rate per annum: 3.83% [2]


  4. fraud in exchanges

This is unraveling right now with Tether and Bitfinex. [3] It should be assumed any and all cryptocoin exchanges are operating as fractional reserves, and front running customers, unless they can prove otherwise.

[1] https://hackernoon.com/bitcoin-core-bug-cve-2018-17144-an-an...

https://en.bitcoin.it/wiki/Common_Vulnerabilities_and_Exposu...

[2] https://www.bitcoinblockhalf.com/

[3] https://medium.com/@bitfinexed/latest

https://hackernoon.com/the-curious-tale-of-tethers-6b0031eea...

https://medium.com/@bitfinexed/bitfinex-never-repaid-their-t...

https://medium.com/@bitfinexed/the-mystery-of-the-bitfinex-t...

Bitcoin has a supply inflation rate. It's inflation rate with respect to price over its history, which is what you're comparing with USD, is quite negative.

People have been predicting the collapse of Tether for several years now, and yet, it still trades nearly 1:1 with USD. Funny that the people who actually have skin in the game seem to disagree.

I wish I could upvote your first paragraph and downvote your second -- the latter is a fully general counterargument against the possibility of delusional bubbles, since, in most such cases, the people bidding up the bubble asset do have skin in the game.

Well, of course you're correct. But the market is usually rational, and to the extent that it is not so, it generally corrects itself relatively quickly. Now, it is possible that this is one of those cases where that isn't happening, but we should require fairly strong evidence to believe that. That evidence has not been provided in this case.

What is "bitcoin inflation". World-wide inflation in comparison to bitcoin? I doubt you could make that comparison with such a volatile asset.

The inflation of the cost to produce bitcoin? Maybe, but I doubt anyone can calculate that precisely.

I really really hope its not a measure of price increase of bitcoin.

> What is "bitcoin inflation"

Increase of the available supply of Bitcoin, which is occurring through mining activity. Every day, every hour (usually) more Bitcoin exists. For a while still, anyway. The rate is cut in half every few years until all 21 million have been mined, then inflation is 0 (negative in reality as some Bitcoin become inaccessible, e.g. when users lose their keys).

Thats not inflation, in the economics definition of it. If demand for bitcoin outpaces the supply you have deflation, not inflation.

Some other definitions of inflation could be "the loss of value of a currency(in front of other goods)", which is not what BTC suffers.

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