What is a deflationary crypto?

Unlike Bitcoin, where the maximum supply stays the same, deflationary cryptos have their total token supply gradually decrease over time. This usually comes in the form of a burn rate, in which a portion of every transaction is automatically destroyed or “burned.” Usually this is a flat burn rate.

How does deflation affect Bitcoin prices?

In macroeconomic terms, deflation usually accompanies a contraction in monetary supply. However, prices can decline for a wide range of reasons — including low levels of productivity in the economy, advances in technology, or simply lower levels of demand. In the context of Bitcoin, deflation tends to refer to the cryptocurrency's maximum supply.

What are inflationary cryptocurrencies?

Here’s what you need to know about this new type of token. Inflationary cryptocurrencies have potentially unlimited supplies. Inflation happens when the purchasing power of a currency goes down, usually because a central government prints too much of said currency.

What does 2% deflation mean?

Deflation, on the other hand, describes actual decreases in prices, not a decrease in the rate that inflation is rising. With 2% deflation, a good that used to cost $10 now costs $9.80. Looking For A Financial Advisor?