[M4v3R]

Mining was profitable to average users (i.e. not sitting on huge piles of cash) in 2011 and early 2012 probably (source: I owned two 5970s and some 5870s at mined quite a few coins with them). Right now you have to invest much money in ASICs (GPU mining isn't worth anything at this moment) which may also be never delivered or delivered so late that you're out of game by then.

Most people agree that if you believe in Bitcoin, the best way to invest is just to buy some coins and leave them in a safe place for a year or more. The economy is deflationary so if whole Bitcoin doesn't fail in near future, the price will eventually rise above the price at the moment you invested.

[wintersFright]

Is it deflationary because of the 21 million limit? That limit won't hit until 2140. Or is it deflationary because the projected velocity will go up faster than the mining output?

[skriticos2]

Please don't mix supply with perceived value.

It's deflationary in the sense that with passing time each coin is worth more than before. There is some correlation with money supply, but deflation ultimately means: how much can you buy for a set amount of currency.

The inflation/deflation of the US dollar for instance is measured by statistics like the CPI, which boils down to how much consumer goods you can buy. If you can buy 10 peaces of bread this year for $10 but only 9 peaces of bred next year, you have inflation. If you can buy 11, you have deflation. How the dollar supply (number of existing dollars) changes has a correlation to this (i.e. it influences this), but it's not defining it.

http://en.wikipedia.org/wiki/Consumer_price_index

[wintersFright]

OK, so with passing time, coins are worth more than before because the usage demand is increasing faster than the mining supply. I'm not sure if that is your argument though?

[skriticos2]

Essentially, yes. More precisely demand is increasing faster than readily available supply (people selling Bitcoins for goods or other currencies, also called liquidity).

[oleganza]

When astronomical quantities of USD are being printed into existence (today's QE is like 80 bln dollars per month), CPI is not a good indicator. Rich guys who get all this new money cannot buy 100x more food and toilet paper. What they can do is to buy expensive property all over the world (not very liquid, thus not affecting everyday prices much) and stocks.

Right now CPI does not change as much as USD supply changes, so people don't worry. However, it does not mean this is not delayed and will hit down the road even if they suddenly stop printing new dollars.

[brazzy]

It's deflationary now if the rate of new bitcoins being mined is smaller than the rate of demand increase.