Bitflate is a cryptocurrency with constant inflation of 7% per year. Its goal is to be a Medium of Exchange.

A Deflationary Crisis

The world discovered the Coronavirus in January 2020. It’s been four months. We are learning more and more about the danger of this new virus. We now agree that this virus is not just a flu. It’s novel and dangerous. It paralyzes the world economy. Crypto sphere has pitched limited supply and Austrian economics as cures to inflation and the money printing disease. The Coronavirus seems to be the perfect crisis to prove the use case of cryptocurrency. However, the opposite may be happening. This crisis is cutting deep into the world economy. It has exposed flaws and incompetencies. Government policies are ineffective in the short-term. Money printing and stimulus have not relieved the problems. They even cause political discontent.

We’re seeing oil and commodity price crash. There are reports of farmers dumping milk and eggs because consumptions have gone down. When demand drops and supply remains the same, prices have to drop to encourage people to spend. Commodity prices will drop. Companies will make less money. Then, wages will drop. This is a vicious price decrease cycle. We are heading into a deflationary crisis.

Inflation

Bitcoin may see price appreciation in this crisis. It’s a digital and possibly uncorrelated asset. It’s not affected by the problems that we experience in the physical world. It’s an escape pod. However, Bitcoin remains a speculative asset in the short-term. It’s not going to relieve the problems that we face daily. The Coronavirus crisis has shown that inflation is not always bad.

Bitcoin’s shrinking reward and extremely limited supply make it very volatile. It’s not suitable to be a Medium of Exchange. Crypto builders overlook this property. They think technology improvements like sidechain and programmability will drive cryptocurrency adoption. Since the Bitcoin’s introduction, we’ve seen a lot of proposals for technology improvements. None of them has made cryptocurrency easier to use and drive adoption outside speculation.

We need to abandon dogma and embrace economic changes in cryptocurrency. We need to reject Austrian economics as the only viable principle. If you study the Great Depression closely, you will see that deflation is a vicious threat. It can prolong economic hardship. Inflation has its role. If governments can distribute stimulus fairly, they can drive economic activities. The US government under Franklin D. Roosevelt overcame this challenge. It’s time for us to devise solutions for this crisis.

We need a cryptocurrency that goes beyond a speculative asset and a Store of Value. We need a cryptocurrency that people can use as a Medium of Exchange.

Inflationary cryptocurrency

Bitflate is a cryptocurrency with constant inflation of 7% per year. Its goal is to be a Medium of Exchange. I design a reward system to give more coins to early adopters. The idea is to encourage people to hold on to their coins and create some restriction of supply. This bootstrap mechanism creates incentives to hold Bitflate coins. The reward system is as follows:

  • 0: 50 (supply: ~10 million)
  • 1: 25 (supply: ~15 million)
  • 2: 12.5 (supply: ~18 million)
  • 3: 6.25 (end of halving)
  • 4: 6.56 (start of inflation 7%)
  • 5: 7.02
  • 6: 7.51
  • 7: 8.04
  • 8: 8.60
  • 9: 9.20
  • 10: 9.85 (supply: ~31 million)

For the first 3 halvings, Biflate follows the same reward schedule as Bitcoin. But it will switch to inflation after 3 halvings. Even with inflation, it will take 10 years for supply to reach 31 million coins. Bitflate adheres crypto principles. It differs on economics and is designed to be a Medium of Exchange. It offers the same freedom as Bitcoin. The game is fair.

Bitflate is a cryptocurrency with constant inflation of 7% per year. Its goal is to be a Medium of Exchange.