6 lines
715 B
Markdown
6 lines
715 B
Markdown
# Deflationary
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A deflationary asset is one in which the supply of the asset is decreasing.
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A deflationary spiral is a situation in [market](market.md) where decreases in the price level of an asset lead to lower production, which consequently leads to lower demand, which leads to further decreases in the price level. See the historical notes on [gold-standard](gold-standard.md) and [sound-money](sound-money.md) for examples of systems which give rise to deflationary spirals.
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[Bitcoin](bitcoin.md) is an example of a deflationary asset due to its total fixed supply and increasing loss of funds due to lost [wallet](wallet.md) or illiquidity of funds associated with [illicit-financing](illicit-financing.md). |