What are the real world implications of #bitcoin being lost in fires, etc?
The common answer is it'll pump our bags, which makes sense to me. But. Why would it pump our bags, really? There isn't really less money chasing the same goods.
Maybe it depends how you look at it. Maybe the og Bitcoin code had 210 million, and now all those coins are "lost" (unspendable, because they don't even exit), cos satoshi decided on only 21 million. Now 189mil coins have 0 velocity, so my bags have been "prepumped", if you follow. It only matters what people think is the total supply, but not for anything important. Wouldn't the free market just keep going exactly as it would if those coins never got spent?
So I'm not sure how to think about this exactly. We've never had true scarcity that became more scarce. After all, it's not the amount of money in the economy that matters, only that you can divide it up. We only need 1 BTC with like 80 decimals.
If that lost BTC never entered the market, then it's only economic purpose is to make guesses on global wealth, but it can never be known if a #BTC will suddenly come awake and have velocity.
How to think about this?
What are the implications to the global economy if scarce money becomes more scarce?
first you gotta define "scarce" in that sentence ofc. Because if some of satoshi's coins are NEVER EVER EVER going to move because he's just super strong willed, or whatever, then it's identical (is it?) to him losing the keys. The BTC is either moving, or it's not. If I hodl for 100y then that btc is "lost", but then suddenly it has velocity, and the economy is effected. In a sense it's inflationary, it's like a weird brrr bug in the matrix or whatever.
So the implications now bring in time. If I don't spend any money for 3 days it does nothing; but if don't spend for 100y that does something. In bitcoin's case there is only the one giant pool of BTC that slowly loses coins permanently. The pool is the pool regardless of how many there are (only right of the decimal place matters for MoE); the number of btc is like the size of the universe expanding, but nothing real to our planet happens just because the universe is inflating. And nothing in the economy changes just because there is suddenly less BTC.
It gets complex because what about money that HAD velocity, did some sort of economic work, and then destroyed itself. That's like debt in a way.