In total there are a maximum of 21 million Bitcoins, of which about 17 million are currently produced. The process of production is called mining and will last until 2140, until then the amount of bitcoin produced daily will gradually decrease. Currently 12.5 Bitcoins are produced every 10 minutes. Since so the number of Bitcoins cannot be expanded after release, its limited to a total of 21 million, Bitcoin is deflationary. You cannot produce more than 21 million bitcoins in total.
Inflation through theoretically unlimited monetary expansion, as with central bank money, is therefore not possible. This protects Bitcoin from manipulation and avoids inflation where the value of money becomes less and less valuable.
A negative point of a deflation can bee seen when citizens store their coins to let the value grow and not investing them. That could be bad for the economy but after all the positive arguments seems to be more important to me.
So far, the Bitcoin price was always positive, so the Bitcoins were averaged more value from year to year. Because of this, Bitcoin is often compared to gold, because it is just not reproducible. In times of expansionary monetary politics on the part of the central banks a not to be underestimated advantage. This aspect can have a positive effect on long-term value stability because it creates trust and predictability.
A danger of this deflationary effect are too many hard-forks, in which an additional version of Bitcoin is created. That was the case in 2017, when Bitcoin Cash was a major hard-fork. Since then, there are 21 million Bitcoin and 21 million Bitcoin Cash. Personally, I think hard-forks are not good and they could undermine Bitcoin, remember if we would have 100 different sorts of Bitcoin, the market cap would be spread between these 100 Bitcoins and the deflationary character would be lost.
Generally, Im very positive about this deflation, its results are increasing prices in long term. What is your opinion about this characteristic of Bit[Suspicious link removed]d or bad? And are hard-forks a danger?
Depends very much, on how You look at BTC. If You understand, that it is a monetary scheme, a milking mechanism and You are OK with it, then probably that deflation is a good thing. If You are a little bit simpleminded "investor" who thinks, he is a part of revolutionary digital money, then think this: mining is a necessary task right? Task of calculating, keeping records, validating transactions. With every halving, payment for the same task halves (less BTC released). If You now look again at the graph, then You see, that the following:
before first halving, few transactions to validate (few BTC members, few transfers): $$$$$$$$$$$$$$$$
after first halving, more job to do, as community grows, check out halved: $$$$$$$$
after second halving, even more work to do, checkout: $$$$
then $$
Does it remind You anything?
So, dont be so positive about "deflation".
