<p>I believe that it's by design.</p>

<p>As others have stated, several other crypto-currencies have different inflation rules. I believe, however, that Bitcoin was designed with a fixed money supply to motivate early adopters to adopt the currency, thus bootstrapping it into existance.</p>

<p>One could argue that "it's not fair to late comers", but if it works (= it eventually gets millions of people to use the currency), then it was a good design choice.</p>

<p>It makes it relatively easy to reason about potential worth of BTC. The argument goes like this: "If there will only ever be 21,000,000 BTC, <strong>and some day</strong> 1% of the entire world be using it, then 1 BTC will be worth 1/2,100,000,000 of the world's 'value'. I better get me some of that BTC". This calculation does not depend on when exactly is "some day" - be it 10 or 100 years in the future.</p>

CC BY-SA 3.0
2012-01-10T08:28:11.133Z
2012-01-10T08:28:11.133Z
ripper234
<p>It's technically possible to have a blockchain with any generation schedule, such as X% inflation per year or constant reward per block.</p>

<p>The main reasons for a schedule with an upper bound is:</p>

<ol>
<li><p>The Austrian economics school, to which apparently Satoshi and a large part of Bitcoin's early adopters subscribe, says that the optimal situation is that the monetary supply is bounded.</p></li>
<li><p>If you want to have some long-term inflation you will need to choose what it is, and any choice will be arbitrary. "0% inflation" is a bit less arbitrary option to anchor on.</p></li>
<li><p>One of Bitcoin's key properties is that the monetary is supply is not manipulable, and it's perceptually easier to sell it on this point by saying "The protocol guarantees there will never be more than 21M bitcoins" than "The protocol guarantees that in the long term, there will not be more than 3% monetary inflation per year".</p></li>
</ol>

CC BY-SA 3.0
2012-01-09T18:37:26.960Z
2012-01-09T18:37:26.960Z
Meni Rosenfeld
<p><a href="http://www.geistgeld.org" rel="nofollow noreferrer">GeistGeld</a> and <a href="http://solidcoin.info" rel="nofollow noreferrer">SolidCoin</a> offer block rewards that don't decrease over time, I believe. Bear in mind they also have other major differences to the design of Bitcoin though, especially SolidCoin (because it's not a community driven open source project).</p>

<p>The advantage of having a limited number of units is that it is a better store of value. On average, a unit of currency should only increase in value over time. Because we can break one bitcoin down to 8 decimal places (and further if necessary), there's no need to have it any other way. </p>

<p>When it comes to hoarding, the current exchange rate takes into account likely future increases in value (as well as potential risk of things like a collapse in value). </p>

<p>These questions examine the impact of hoarding/speculation on Bitcoin:</p>

<ul>
<li><a href="https://bitcoin.stackexchange.com/questions/408/does-hoarding-really-hurt-bitcoin">Does hoarding really hurt Bitcoin?</a></li>
<li><a href="https://bitcoin.stackexchange.com/questions/1265/does-speculation-hurt-bitcoin">Does speculation hurt bitcoin?</a></li>
</ul>

CC BY-SA 3.0
2012-01-10T02:30:08.403Z
It is hard to say what SolidCoin does "over time". They have been twisting around the rules quite a bit already.
Thilo
CC BY-SA 3.0
2012-01-10T02:35:48.097Z
Agreed. The FAQ does say "No maximum coin generation", but I don't find it to be very well written. It also says it has "a small inflation amount at the end which will increase value of each coin over time whilst providing economic liquidity". That doesn't make sense because inflation *decreases* the value of each coin over time.
Highly Irregular
CC BY-SA 3.0
2012-01-09T20:32:10.437Z
2012-01-09T20:32:10.437Z
2017-04-13T12:47:36.707Z
Highly Irregular
<p>I wonder what is the benefit of having Bitcoin reduce the coins mined per block over time?</p>

<p>Suppose a slightly less deflationary growth scheme was possible (and keep other properties that make Bitcoin desirable), that might encourage more people to use it as an actual currency and less as a hoarding item.</p>

<p>For instance, can another blockchain-network be created that increases 0.5% the coins mined per X number of mined blocks?. </p>

CC BY-SA 3.0
2012-01-09T15:33:49.420Z
possible duplicate of [What are the advantages/disadvantages of a continuously decreasing block reward compared to the current method?](http://bitcoin.stackexchange.com/questions/1526/what-are-the-advantages-disadvantages-of-a-continuously-decreasing-block-reward)
ThePiachu
CC BY-SA 3.0
2012-01-09T15:36:49.010Z
I disagree, A duplicate should be a perfect duplicate. It's good with a big variety of similair questions for searchabillity.
Kristoffer Nolgren
CC BY-SA 3.0
2012-01-09T16:04:57.863Z
sorry @ThePiachu but that is absolutely not a duplicate, if you read that question is about abrupt discontinuities in the deflation rate, not at all about the benefit of a deflationary mining rate itself
lurscher
<currencies><mining-reward><reward-schedule><inflation><deflation>
Cryptocurrency with less deflationary properties
lurscher
# Cryptocurrency with less deflationary properties

(Asked by: username_0 on 2012-01-09)

I wonder what is the benefit of having Bitcoin reduce the coins mined per block over time?

Suppose a slightly less deflationary growth scheme was possible (and keep other properties that make Bitcoin desirable), that might encourage more people to use it as an actual currency and less as a hoarding item.

For instance, can another blockchain-network be created that increases 0.5% the coins mined per X number of mined blocks?.

**Tags:** currencies, mining-reward, reward-schedule, inflation, deflation

> **Comments:**
> **username_1**: possible duplicate of [What are the advantages/disadvantages of a continuously decreasing block reward compared to the current method?](http://bitcoin.stackexchange.com/questions/1526/what-are-the-advantages-disadvantages-of-a-continuously-decreasing-block-reward)  
> **username_2**: I disagree, A duplicate should be a perfect duplicate. It's good with a big variety of similair questions for searchabillity.  
> **username_0**: sorry @username_1 but that is absolutely not a duplicate, if you read that question is about abrupt discontinuities in the deflation rate, not at all about the benefit of a deflationary mining rate itself  

---

## 3 answers

### Answer by username_3 on 2012-01-10. Score: 1 | Accepted answer

I believe that it's by design.

As others have stated, several other crypto-currencies have different inflation rules. I believe, however, that Bitcoin was designed with a fixed money supply to motivate early adopters to adopt the currency, thus bootstrapping it into existance.

One could argue that "it's not fair to late comers", but if it works (= it eventually gets millions of people to use the currency), then it was a good design choice.

It makes it relatively easy to reason about potential worth of BTC. The argument goes like this: "If there will only ever be 21,000,000 BTC, **and some day** 1% of the entire world be using it, then 1 BTC will be worth 1/2,100,000,000 of the world's 'value'. I better get me some of that BTC". This calculation does not depend on when exactly is "some day" - be it 10 or 100 years in the future.


---

### Answer by username_4 on 2012-01-09. Score: 5

It's technically possible to have a blockchain with any generation schedule, such as X% inflation per year or constant reward per block.

The main reasons for a schedule with an upper bound is:

1. The Austrian economics school, to which apparently Satoshi and a large part of Bitcoin's early adopters subscribe, says that the optimal situation is that the monetary supply is bounded.
2. If you want to have some long-term inflation you will need to choose what it is, and any choice will be arbitrary. "0% inflation" is a bit less arbitrary option to anchor on.
3. One of Bitcoin's key properties is that the monetary is supply is not manipulable, and it's perceptually easier to sell it on this point by saying "The protocol guarantees there will never be more than 21M bitcoins" than "The protocol guarantees that in the long term, there will not be more than 3% monetary inflation per year".


---

### Answer by username_5 on 2012-01-09. Score: 1

[GeistGeld](http://www.geistgeld.org) and [SolidCoin](http://solidcoin.info) offer block rewards that don't decrease over time, I believe. Bear in mind they also have other major differences to the design of Bitcoin though, especially SolidCoin (because it's not a community driven open source project).

The advantage of having a limited number of units is that it is a better store of value. On average, a unit of currency should only increase in value over time. Because we can break one bitcoin down to 8 decimal places (and further if necessary), there's no need to have it any other way.

When it comes to hoarding, the current exchange rate takes into account likely future increases in value (as well as potential risk of things like a collapse in value).

These questions examine the impact of hoarding/speculation on Bitcoin:

* [Does hoarding really hurt Bitcoin?](https://bitcoin.stackexchange.com/questions/408/does-hoarding-really-hurt-bitcoin)
* [Does speculation hurt bitcoin?](https://bitcoin.stackexchange.com/questions/1265/does-speculation-hurt-bitcoin)

> **Comments:**
> **username_6**: It is hard to say what SolidCoin does "over time". They have been twisting around the rules quite a bit already.  
> **username_5**: Agreed. The FAQ does say "No maximum coin generation", but I don't find it to be very well written. It also says it has "a small inflation amount at the end which will increase value of each coin over time whilst providing economic liquidity". That doesn't make sense because inflation *decreases* the value of each coin over time.  

---

