Is Bitcoin part of the Money Supply? Is it affecting Inflation?

I wouldn't think of it this way. There is no global thing called "the money supply" and there is no generalized thing called "inflation". These concepts generally only make sense in the context of a currency.

So M2 is a good example of this principle. M2 IS NOT ALL CURRENCY IN BANK ACCOUNTS AND WALLETS. It is a measure of USD both in terms of currency(paper money) and debt(credit) in circulation. You can't just talk about M2 generally, outside of the context of the dollar, it is specifically a metric for measuring the dollar. Therefore by its definition, bitcoin cannot directly affect M2 or USD inflation.

So then saying > have we expanded the money supply by Trillions?

is sort of like saying "Is it hot now?" to which you'd respond "Is what hot?" The question would have to be "Have we expanded the money supply of USD by Trillions?" In which case the answer would be yes but that has nothing to do with Bitcoin.

This is also why currencies are denominated in pairs like USD/EUR or BTC/ETH. The USD is kind of a meaningless concept until you compare it's value relatively to something else, either goods or services or another currency. So you can't just say a dollar is worth 12 value. You have to say a dollar is worth 1 hamburger or a dollar is worth .00001 BTC. In this sense inflation of the USD is when it takes more USD to buy a BTC. In this sense again you can see that inflation has to be relative to a specific currency.

There is a "wealth effect". If you think you are rich because you have a lot of Bitcoins that will be worth more 30 years from now you might spend money instead of save.

Collectively people doing that create aggregate demand in the economy, increase GDP, and if they use the extra money they believe they have to bid up the prices of goods and services, increase inflation.

It's effecting how I personally contribute to inflation: my demand for USD has dropped & my perceived worth of USD relative to goods/assets is increasingly less.

And I don't think I'm alone.

The normal sense used by statistics bureaus and such is pretty narrow and focuses only on the national currency, usually. So in that sense, given that Bitcoins are not dollars or yen or anything else, then by definition, no.

In a more general sense? I don't know. Folks are still debating whether Bitcoin should even be considered a currency. Maybe it's better thought of as an asset like gold, from how people seem to be using it. Except at least you can make computer chips to mine Bitcoin with, out of gold. So maybe it's not even quite like that. Maybe it's something entirely new and our old models don't model it quite right, sort-of-like currency, but not quite.

Now, if we do accept that Bitcoin is operating as a currency, then yes, it would be part of a more fuzzily defined notion of total global (or American) money supply, including all national currencies and currency-like instruments in use. But then, taking that very literally, so are cigarettes, given their use in black market commerce in prisons. For both of them it would be hard to measure, but it's definitely a factor in some way.

I don't know if it's affecting inflation. I do suspect that the recent rise in price is at least partly driven by people seeking safe harbour from inflation, especially those who do not have an easy mechanism for buying real estate and the other usual hedges against inflation.

I think it does. I'm talking about the people around me at least, but I seem them start spending a lot more. Also, they, that in the crypto world are almost poor are always planning on defeating fiat to prove that cryptocurencies are better, I don't know if whales think the same way, I hope not.

Cryptocurrencies do affect inflation a lot just because it adsorbs excessive money supply happening last year. There is a large speculation that more or less free flow from fiat to crypto is largely due to it's capacity to adsorb liquidity.

I'd say yes, of course. In an "ideal" bitcoin scenario, the more people get convinced that bitcoin is here to stay, the more it goes mainstream, the more people will buy it driving its price to astronomical values, until it reaches an equilibrium. But by that time, you have created a large number of nominally rich people. So a lot of people will have a lot of money to spend. Say you want to buy a house, you can overbid by a larger margin, because you're bitcoin-rich. But the people you are competing with are too. So you end up paying much more for the same. You have effectively created inflation.