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The money supply is fixed to 21 million. Fortunately, the coins are basically infinitely divisible, so as the coins become more valuable (assuming over the long
by supster 11y ago
The money supply is fixed to 21 million. Fortunately, the coins are basically infinitely divisible, so as the coins become more valuable (assuming over the long run that coins are used for larger and larger amounts of commerce rather than speculation), small transactions simply happen at smaller units. In other words the system is steadily deflationary instead of the highly volatile inflationary system we currently have with fiat currencies.
- Hupriene 11y agoThe theoretical maximum money supply is 21 million. The actual amount of money in circulation can still vary wildly as keys to wallets containing bitcoins are lost (resulting in a permanent reduction of the maximum money supply) and as speculators cash out (resulting in a temporary increase in the effective money supply).
- dragontamer 11y agoMore importantly however, is the rent-seeking by BTC enthusiasts. BTC hoarders don't "deserve" any more wealth than later adopters, and yet wish to create wealth from nothingness and basically a giant Ponzi scheme. At least with stocks and companies, the stock actually means something: typically a vote for the board, or access to a dividend.
- Freak_NL 11y agoIt seems strange to consider a currency as a viable alternative for other currencies, when a sizeable chunk of the total available sum of it is owned by a single person or group simply because they came up with the system, and another large part is in the hands of speculators. There is nothing fair about a currency that is so volatile in value by design and is essentially speculative in nature. It is sad to see that this side of Bitcoin is not stressed more often.
- CyberDildonics 11y agoYou literally described the US dollar, maybe every currency.
- dragontamer 11y agoActually the US Dollar is inflationary, which means those who hoard US Dollars lose out in the long term. You lose approximately 2% to 3% depending on how well the Fed actually hits its benchmarks. BTC on the other hand is inflationary, due to the (artificial) cap of 21 Million BTC. In any case, inflationary vs deflationary is a moot point. Too much of either side is bad. The important part is price consistency, which everyone can agree is relatively fair. 2% to 3% inflation (loss of value) is much more consistent than anything that BTC has accomplished... with wild swings of 100% to 1000% on some years. ------ I'm intrigued by DOGEcoin, explicitly because it adopts an inflationary model with infinite supply. I think that sort of model is more fair in the long term, and certainly more fun.
- bdhiehihhd 11y agoYeah, people don't hoard us dollars, they hoard T bills and other obfuscated forms of us dollar debt.
- dragontamer 11y agoConsidering that T-Bills have a return of 0.2% right now, that still loses to inflation. IE: If you actually want to make money, you have to go equities or start up a company.
- pbreit 11y agoWhen it comes to volatility, bitcoin is at one end of the spectrum and every other currency at the other.
- bdhiehihhd 11y agoThis is an ignorant view. Bitcoin is tiny, its measured in billions. How much did the Canadian currency just lose in the last view weeks? That amounts to hundreds of billions of vaporized wealth.
- saalweachter 11y ago> How much did the Canadian currency just lose in the last [few] weeks? Huh, that is a really interesting question. It's not as trivial to calculate as it is for Bitcoin, where you can multiply the moneys held by the change in exchange rate -- essentially no prices as denominated in BTC, while most prices most Canadians deal with are denominated in CAD. For most Canadians, the ratio of their income and rent or groceries will stay the same, so in some senses they haven't lost anything. But the price they pay for imports, like computers and oranges, will go up, so they have definitely lost something. I wonder what the balance comes out to.
- esun 11y agoMany domestic products become more expensive as the currency adjusts downwards as producers take advantage of higher foreign prices. In the long run, this can depress foreign prices and even increase manufacturing demand here due to lower labour costs. But these changes don't happen overnight.
- pbreit 11y agoThat is an ignorant view. Percentage matters much more than absolute when it comes to currency.
- iSnow 11y agoThe Canadian Dollar lost about 5% over the last weeks. That's about as much as BTC wins or loses on a single lucky or bad ay.
- kobayashi 11y agoIf BTC become more valuable, then how is that deflationary?
- rsutphin 11y agoThe thing being inflated in inflation is prices. If a currency becomes more valuable, things cost less in that currency. An appreciating currency leads to deflation, all else being equal. (This assumes you are treating BTC as a currency, which appears to be the OP's intent.)
- kobayashi 11y agoOh right, of course. Inflation means that the value of currency becomes less valuable. Just a brain fart on my part. Thanks!