I’m not questioning the philosophy of Bitcoin…I’m asking a math question (more or less).
How does Bitcoin not inflate when used as a medium of exchange (beyond there will never be more than 21M tokens…)?
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Because there is only so much Pure Human Empathy to be exchanged and Satoshi's can cope with that. However, if the number of decimal places need increasing, beyond Satoshi's to Finney's or beyond, then that's an easy fix within Bitcoin at it's Core
Inflation is caused by an increase in the money supply. With bitcoin the money supply is fixed.
In your example you have kept satoshi to apple conversion the same. In reality the price of everything will drop over time when measured in bitcoin.
price of goods inflate... money devaluates
You have a key fundamental flaw in your reasoning. If Bitcoin goes from $100k to $200k the price of the apple in sats will be cut in half. Unless the seller of the apple leaves the price of his apple the same in sats. However, because prices fall to the marginal cost of production, that apple seller will rapidly be starved out of the market by all other apple sellers who adjusted their prices downward accordingly. I could price my house at 8 Bitcoin forever, but no one would buy my house when the price of Bitcoin went up. They’d find a different home seller that repriced their home accordingly.
Bottom line, priced in sats, the cost of items go down because we become better at producing them and there is a finite supply (21 million) of the money that everything will be priced in.
because 'inflation' means monetary debasement, not 'prices went up' -- prices going up is a consequence of inflation.
If you want a deeper dive into this question, check out
- Murray Rothbard, [The Mystery of Banking](https://mises.org/library/book/mystery-banking); or
- Ludwig von Mises, [The Theory of Money and Credit](https://mises.org/library/book/theory-money-and-credit)