Would that be deflationary?
“Would that be deflationary?”
I’m far from an expert in economics, but I think the mathematical design of Bitcoin is intended to avoid the inflation caused when governments (or international bankers) decide to print more money.
Because the rate of discovering new Bitcoins is predictable, I would assume that the expectations based on this are built into the valuation.
So, my intuitive answer is, no, Bitcoins avoid inflation or deflation by design. However, they are subject to the possibility of price manipulation. And the possibility of permanently losing access to a percentage of Bitcoins might be considered deflationary, but that is no different than traditional currencies being destroyed, for example, in a fire.
The value of Bitcoin is driven by speculation, scarcity, the efficiency and autonomy of transactions, and the willingness of many entities to accept it as a form of payment.
What stabilizes the value of traditional currencies is the willingness of governments to accept them as payment for the taxes which MUST be paid.
We all must pay taxes either directly or indirectly to our respective governments. And, therefore, we are forced to use the currency accepted by our government, even if we must convert from some other type of currency first.
I believe it is inevitable that financial transactions will transition to using cryptocurrency as the dominant mechanism. They are more efficient than traditional digital currencies and will eventually become more safe. And paper and coin money will become too expensive to make, as anti-counterfeiting measures require techniques that cost too much of the value of the money.