Bitcoin's inflation rate is currently about 3.4% per year, which is a bit on the high side though still better than many national currencies. In a century or so that will have decreased down to nearly zero, which is still only neutral and not at all deflationary.
It's massively deflationary due to its user-hostile nature, irreversibility and lack of appeals authority. This leaves it prone to many kinds of loss (and fraud). An analyst suggests 1500 coins are lost per day, and so less than 14MM will ever be in circulation [1]. Currently, only (144 * 6.25 = 900) coins are mined per day, and 1500 are lost. Ergo, it's deflationary and will become more so over time as the block reward drops.
I also disagree that 3.4% is a "better" inflation than many national currencies. It's lower, sure, but I am reluctant to draw a value judgement as inflation has a specific and important role in the economy. I don't know enough to tell you authoritatively that 3.4% is "too high" and "worse" than the classical 2% US target.
Did you actually read the article you cited? It's pretty obvious that the authors (among others) feel that the 1,500 BTC/day loss rate claimed by this one fringe analyst is a massive exaggeration based loosely on outdated statistics. Sure, lots of bitcoins were lost in the beginning, when they weren't worth much. Most of the reports are from people who had bitcoins early on and only recently realized that they should have kept better care of them. The wallet UIs and best practices have been steadily improving, and with prices where they are right now there is no good reason for anyone to "lose" their bitcoins any more than they would accidentally "lose" a $100 bill (which is similarly irreversible).
Any artificially-induced inflation of the money supply is economically destructive, promoting malinvestment and waste. Some inflation in the beginning is inevitable, of course—you have to start from somewhere—but it's a very good thing that Bitcoin will have an supply inflation rate on par with, or lower than, most national currencies before it becomes prevalent enough to significantly influence pricing in the investment markets.
Inflation does have an important role in the economy. When it happens naturally it tells investors that we are in desperate need of more capital investment, and it basically doesn't matter what kind of ROI can be expected as long as it's at least somewhat positive. The issue is that this same investment behavior readily leads to diverting resources from more productive investments to less productive ones when the economy should be deflationary (indicating a positive average expected ROI) but the money supply is manipulated to make it look like there is a shortage of capital.
The article I linked you to is from a very pro-Bitcoin source lol. The actual research note was linked from it here: [1]
> Any artificially-induced inflation of the money supply is economically destructive, promoting malinvestment and waste.
I'd love to see your sources there, because I don't agree. Inflation plays important roles like pushing for allocation of capital. Inflation only matters if you hold dollar bills under your mattress. Once you invest it in anything, including real estate or a savings account, the effect is decimated, or reduced below zero.
> Inflation does have an important role in the economy. When it happens naturally it tells investors that we are in desperate need of more capital investment.
What is "natural inflation" in Bitcoin? Does it naturally sprout more coins in steady state? Or are you suggesting velocity of money in a currency unable to respond to externalities should suffice?
