"The effects of deflation are:
Decreasing nominal prices for goods and services
Increasing buying power of cash money and all assets denominated in cash terms
May decrease investment and lending if cash holdings are seen as preferable (aka hoarding)
Benefits recipients of fixed incomes"
Copied straight out of wikipedia... I'm sure the reliability of statements because of its source will be attacked, but that is another debate to be had.
By saying bitcoins would deflate I am stating yes the amount of bit coins would be scarce but no they would not lose value, they would in effect gain value because of the scarcity. With a hard cap at of 21 million bitcoins and 11 million currently in existence they cannot be easily produced in mass. The more the world adopts them, the more goods and services will be relying on a monetary system that overall has remained the same in terms of overall units. Thus, the increase of GDP in measures of bitcoins, thus the increase of the value of bitcoins, leading to deflation (less available coins), deflation of services as well as prices would continue to drop as they become more valuable.
Inflation and deflation are rather complicated concepts to grasp when comparing with monerary policy, I admit. I am no expert but have a keen interest in economics.
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