Bitcoin Money Supply and Money Creation

Many articles mention, that the limited Bitcoin money supply is a major advantage of this digital currency. The reasoning usually goes like this. Since Bitcoins can only be created through mining and there is an upper limit of 21 million, Bitcoin is supposed to be inflation proof. This article for instance says, Bitcoin “theoretically eliminates inflation”. If this was true, Bitcoins would not lose purchasing power. The Bitcoins I own today would buy me the same amount of goods and services tomorrow. Or a larger amount in the case of deflation.

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Central banks could be pressured into competitive devaluations

Reuters is reporting that the Bendesbank chief, Jen Weidmann, is concerned that central banks are being pressured to pursue more aggressive monetary policies that could risk a “currency war”.

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