> The rate of monetary base inflation being a piecewise downward spiral to a limited final supply is in no way practical for a day to day currency, ever.

Can you explain this, specifically what the relationship is between having a limited final supply and day to day practicality.

There is no way for bitcoin not to be deflationary in the long run.

First, consider that inflation and deflation of currency is the opposite what most people want to happen to bitcoin right now - which is still counterintuitive, because its adoption as a money is counter to its value as an investment. If the cost of a bitcoin rises against fiat, IE, the price goes up, then the currency is monetarily deflating - it is getting more valuable over time. Likewise, when the price drops - ie, after the 2013 bubble until the start of 2015 - thats inflating, because your money is worth less over time.

For pretty much every fiat currency there is, your money is always worth less over time. It means you don't actually want to have physical money, because that money is all kinds of things you could have instead that either appreciate in value or give you a value add versus the money just losing its purchasing power.

In almost all cases that inflation is due to a growing monetary base. States are printing more fiat money all the time, and sometimes they do major injections of money (quantitative easing, for example) to stimulate economic growth. That devalues the money, and it means you don't want to have any money.

That mechanism is good for society, because it means that nobody is just hoarding a gold pile somewhere. Every billionaire is still spending almost every cent they have because to not spend it is to lose value. The last thirty years since the removal of the gold standard, the USD has seen rise to an insane turnover rate, where monetary velocity is incredibly high because nobody wants to have USD for long. You turn it into shares, you turn it into physical assets, you turn it into salaries, you do something with it that is not letting its value rot in a vault.

With bitcoin, varying design constraints compound the issue that unlike with fiat, and like with a scarce resource like gold, hoarding it makes perfectly good sense. Bitcoins monetary base has constant velocity for years, and its only decelerating. Every four years the payout rate of mining a block is halved. Its already been halved once, and will be halved again next year. It keeps getting halved until mining stops paying out at all in about a hundred years. But because you are halving the payout rates, there are already over 14 million btc out a limit of 21 million, so the monetary base is already over 2/3's as large as it is ever going to get.

That kind of base cannot handle anything catastrophic to its monetary system. A sudden influx of investment into bitcoin will always skyrocket the price. Whenever it has a breakout moment the price goes insane, and there is nothing to price control it because there is no way to expand or contract the monetary base to account. As a result, I and many other people are just sitting on bitcoin hoards waiting for Amazon to start accepting them so that the price goes to Mars again.

That kind of thinking, and that kind of economic interaction, is a huge backslide of a common currency from what we have today. The best money is one you don't hold onto for long, that you want to get rid of as quickly as possible, because it maximizes monetary velocity which means your economy is running at max speed. If you slow down velocity - if people stop spending money, and it stops changing hands, as is often the case during uncertain political environments - your economy slows down. If you put bitcoin in that position, there is a huge incentive to not spend bitcoin because bitcoin is a mathematically limited resource. The more its used the more valuable it gets and the more pervasive it is the more reason there is to never use it for its "intended" function.

Its the perfect gold replacement. You could strike a gold vein today and be a millionaire overnight. Unless you can impersonate a wallet (basically a sha1 hash, good luck brute forcing that) you aren't going to find random gold. And that isn't even digging up new gold so much as its finding gold in someones basement, maybe in a vault you broke into or maybe buried behind a wall long forgotten because the owner lost the wallet or password. Its even better because bitcoin is literally only the value of electricity and computer hardware that make up its network. Its a lot less distortionary to goods markets than treating gold, silver, platinum, etc as scarce commodities is, because it means people buy and hoard gold and other precious metals just for the sake of hoarding them, which drives the price up for anyone who has a practical use for that metal (gold is a great conductor, and gold capacitors are super efficient) making it prohibitive to use because everyone is valuing the metal not for its practical utility but for its rarity. The commodity market for palladium is no where near as ridiculous as golds, even though they are both rare earth metals, because gold has a history that makes people buy and own it for literally no good reason besides other people do. And you could do that exact same mutually respected scarcity == rarity == value proposition with bitcoin, without any ugly side effects like making my computer slower because putting gold in half my circuits would double or triple the cost of the product at least.

Of note most altcoins have no monetary base caps. Litecoin is basically a slightly improved forked bitcoin, so it still does. But currencies like peercoin and dogecoin have no caps, but do it in different ways - peercoin has a static 1% inflation rate, so its constantly minting more peercoin over time, but the same amount of the base is minted annually - which means if you are losing more than 1% of the monetary base each year due to lost wallets, your currency is still deflating. Dogecoin statically mints 5.25 billion coins a year, so eventually your monetary base becomes large enough that you are losing as many coins as you are minting.

What I'm getting at is that no cryptocurrency yet has actually solved this problem, and I've already posted my own ideas on it all over the place, but its really the breakout problem domain to getting a viable money replacement for average joes rather than a gold replacement.

> That mechanism is good for society, because it means that nobody is just hoarding a gold pile somewhere.

Why is that necessarily bad? Inflation requires individuals and companies to grow to maintain value, that is potentially unsustainable. If the money base grows faster than resources utilization can be made more efficient, then you wind up either 1) destroying the environment or 2) screwing over the poor. In order to continue, the exponential growth inherent in inflation presumes a future that is rosier than the present. The people who get screwed over are not the wealthy, they have access to inflation-proofed investments and also have access to the lowest interest rates (most competitive with inflation, sometimes better than) to make leveraged reallocation of resources.

That kind of base cannot handle anything catastrophic. Because everyone is yoked together by leveraging, a catastrophic event, say, a tsunami in seattle, will domino over such that the individuals depending on the fractional reserve of the victim's holdings will then be forced into default, and those dependent on them, and so on and so forth via the multiplier effect.

To say that a non-inflationary system cannot handle an catastrophe is simply ignoring some pretty stark evidence. Between 1820-1900 the US was effectively on the gold standard and somehow, it managed to survive a massive civil war that tore apart the nation and not 40 years later it was basically one of the world powers.

> inflation requires individuals and companies to grow to maintain value, that is potentially unsustainable.

Are you talking about currency inflation or economic inflation? If a companies assets are appreciating against currency due to inflation, then that is in and of itself the growth aspect of competing with inflation. Nothing about an inflating money means anything needs to grow, it just means if you are holding dollars you are losing value. So just don't hold dollars.

It is bad because hoarded money might as well not exist. It exits the monetary system and effectively deflates the monetary base and reduces monetary velocity because its exited transactions for however long the holder wishes to take it out of circulation. Of course, it is really hard to even imagine a situation where you could do this with traditional fiat - unless you stuff it in a suitcase and hide it in your wall, you don't put money in any bank and not have fractional reserve banking done with it.

> Because everyone is yoked together by leveraging, a catastrophic event, say, a tsunami in seattle, will domino over such that the individuals depending on the fractional reserve of the victim's holdings will then be forced into default, and those dependent on them, and so on and so forth via the multiplier effect.

You need to distinguish between that fractional reserve banking model and inflationary high velocity money. With cryptocurrencies you pretty much cannot do fractional reserve banking, because you cannot unspend transactions and the entire transaction history is perfectly transparent. I mean you could, but your users could then track their money through everyone you loan it to, and you cannot loan out more than you have. It would at the least be a very different beast from our current model of "trust us, your money is 'safe'". Unless you are on a deflationary or otherwise static currency like gold backed dollars your assets are just not in that currency.

And that works fine with a reactionary inflationary cryptocurrency. Nothing stops you from using bitcoin as a wealth trap like gold, where you just take its scarcity and the value of its network to provide value to the depreciating resource. Throw your inflationary coins into bitcoin, and then sit on bitcoin, there is your gold hoard. The point is that the inflationary currency then changes hands, and the whole point of a modern money is for it to be spent. If you discretize the store of value from the unit of exchange you avoid all the issues mingling them togther.

> it managed to survive a massive civil war that tore apart the nation and not 40 years later it was basically one of the world powers.

The Civil War increased Union national debt fifty times over, from about 60 million to 2.8 billion. It was an unprecedented amount of bond issuance and international loans that has still never been paid off. You would be surprised how well nations can weather spending a lot of money - they can get some of the best loans out there, after all, either from their citizens or from other nations. You don't borrow 15 trillion dollars, ask for another trillion, and get anyone lining up to take that offer anywhere unless you are the USA.

> non-inflationary system cannot handle an catastrophe

They can handle catastrophe, you can even postulate they handle it better since you don't need to liquidate assets to an inflationary money if you just hoard the cash. Its about everything that is not a catastrophe, the daily operations of the economy, and a deflationary currency turns a normal day into a catastrophe when people stop using their money because they want to hoard it in a safe. That depresses the whole economy and slows down everything when you are not aiming for maximal monetary velocity. Your currency is not the place to store wealth, its meant to be the transactional unit of goods and service exchange, and trying to make it do more than one job makes it do all its jobs poorly.