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Chris Coney (00:00):
Hi there guys. This is Chris Coney speaking and welcome back to the Weiss Crypto Sunday Special. My guest today is Alex Benfield. Alex, welcome back to the Sunday special mate.
Alex Benfield (00:24):
Thanks again for having me.
Chris Coney (00:26):
Thank you for being [inaudible 00:00:27] there. So today we're going to be discussing Bitcoin, technology and deflation and inflation at the same time. So the reason I wanted to talk about this is... Here's my overall thesis. It's not a case that... People tend to think in these general terms like are we in an inflationary economy or a deflationary economy? Well at the end of the day that's a balance of all the various forces. So my view is that at any given time, the entire economic system is under simultaneous pressure from inflation and deflation. So whatever that balance becomes, if there's more deflation than inflation of course we get a general deflationary curve and if it's the other way around we get a general inflationary curve. And the general assumption right now seems to be that the balance is in inflationary direction but there's still deflationary forces at work and we know Bitcoin is deflationary. So can you start us off there in the Bitcoin realm? So Bitcoin is known to be deflationary, right? Why is that?
Alex Benfield (01:35):
Yeah I've never heard of that balance between inflation and deflation but I like it. I think it...
Chris Coney (01:41):
We can get into that. We'll get into that in a minute yeah.
Alex Benfield (01:43):
It's true. So Bitcoin is deflationary which is obviously an interesting trade about it considering that most currencies that we know have inflationary supply. Supply grows and the currency is devalued over time. That's typically what we've seen, what we're used to. It's a big one. Bitcoin is a fixed supply. That's why it's not an inflationary currency. So that in and of itself is already pretty interesting. The fact that the supply of Bitcoin has kept... It's never going to get devalued over time. That is interesting in and of itself but Bitcoin is actually deflationary on top of that. So not only does Bitcoin have a supply cap of 21 million coins that will ever be issued or mined but coins are also lost over time.
So the actual supply of Bitcoin technically is decreasing over time as coins get lost and it's estimated by coin metrics that the total amount of coins that have already been lost to date is somewhere around the realm of 3.9 million. So out of Bitcoins issue I think somewhere around 19 million of the 21 million coins. So if you take 3.9 million out of that you've now dragged that number down to a little over 15 million Bitcoins in existence which is extremely interesting.
Chris Coney (03:15):
It is interesting.
Alex Benfield (03:15):
That that many coins have already been lost. There's more coins that have been lost than we will ever mine moving forward.
Chris Coney (03:23):
Moving forward yeah [crosstalk 00:03:24]
Alex Benfield (03:23):
We only have about two million coins left to mine.
Chris Coney (03:26):
That is a good one. And that will continue right? Every coin that's lost is never recovered and because there's a 21 million [crosstalk 00:03:33]
Alex Benfield (03:32):
It's gone.
Chris Coney (03:34):
The actual total circulating supply of Bitcoin will keep going down as they get lost.
Alex Benfield (03:40):
Right. And we'll never see another 3.9 million coins get lost moving forward. Most of those coins, a big chunk of them I believe are Satoshi coins and early miners would lose them on old computer servers or... Yeah. Back when the block reward was drastically higher than it is now. We're never going to see another 3.9 million points get lost in the future but that being said we'll see small wallets... People will lose accounts or access to small wallets. We can assume that trend will continue on in the future. So the supply will probably keep shrinking at a shrinking rate but yeah, that's a deflationary currency right there. Just something that most people aren't used to. So as the supply decreases over time you can expect the value of Bitcoin, the value of that currency to slowly appreciate as well.
Chris Coney (04:46):
True. Because if everyone's...
Alex Benfield (04:46):
Baring no other factors. Just that shrinking supply and a constant demand would lead the price of Bitcoin to appreciate in the future.
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