inflation
Inflation is the gradual loss of purchasing power of a currency as the money supply expands. Bitcoin was designed with a fixed supply of 21 million coins as a direct contrast to monetary systems where new money can be created at will.
Inflation describes the process by which the purchasing power of a unit of currency declines over time. When a central bank or government increases the money supply faster than economic output grows, each existing unit of currency can buy less than before. The result is a steady erosion of the value held in cash and cash-equivalent savings. Different economies target different rates of inflation as policy goals, but the direction is generally consistent: money created today is worth more than the same amount will be worth in the future.
Bitcoin was designed as a direct response to this dynamic. Its total supply is capped at 21 million coins, a limit enforced by the protocol itself. No central authority, government, or single entity can increase the supply beyond this ceiling. Every four years, approximately, the rate at which new bitcoin is created is cut in half through a mechanism called the halving. This means the rate of new supply entering circulation decreases over time on a predictable and transparent schedule.
The term "disinflationary" is sometimes used to describe Bitcoin's monetary policy: the rate of new supply is positive but consistently declining, approaching zero as the 21 million limit is reached. The final bitcoin is expected to be mined sometime around 2140. This fixed and transparent supply schedule stands in contrast to fiat currencies, where supply decisions are made by institutions with the ability to change monetary policy.