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> deflation is a bad thing as it creates an incentive to not spend Positive interest rates would be bad by the same logic

cortesoft 10y ago
What, why? Positive interest rates are meant to compensate FOR inflation. Because there is inflation, people can't just hold onto their money in cash; they have to put it into an interest bearing account in order to not lose money over time. Keeping your money in a bank account is NOT the same as hoarding a currency, because the money in a bank account is lent out to other people to spend. Money in a bank account is still participating in the economy. Bitcoin investors are not like this; they are holding onto the money in hopes the value goes up. The bitcoins they are holding are not being used for any financial transactions. Those bitcoins are essentially out of the economy while they are being held. This is bad for an economy, when the currency is more valuable as an investment than as a vehicle for economic transactions.
- hndamien 10y ago
  This is not how it works at all. Holders/ "hoarders" of Bitcoin do not decrease the utility of the network one iota. Because there is infinite divisibility, if I want to take some fiat and move it to another place via the network then return it to fiat at some arbitary price at a point in time, the fact people are holding (even if 99% of all Bitcoins were locked up) makes no difference to the utility of the network. All that has happened is that the decimal point has moved. What is happening is that supply is reduced. Demand has presumably remained the same as it otherwise would have been, and as a result the price rises. This is great for people holding, and it encourages more saving - but the rising tide is lifting for all boats here. For you who is just temporarily utilising the network, the fact that the price of Bitcoin might be ludicrously high (in your opinion) doesn't change the fact that you can utilise the advantages of a decentralised liberated money for your wealth movement at the same cost that it would have been if Bitcoin were at a low price.

cortesoft 10y ago

What, why? Positive interest rates are meant to compensate FOR inflation. Because there is inflation, people can't just hold onto their money in cash; they have to put it into an interest bearing account in order to not lose money over time. Keeping your money in a bank account is NOT the same as hoarding a currency, because the money in a bank account is lent out to other people to spend. Money in a bank account is still participating in the economy. Bitcoin investors are not like this; they are holding onto the money in hopes the value goes up. The bitcoins they are holding are not being used for any financial transactions. Those bitcoins are essentially out of the economy while they are being held. This is bad for an economy, when the currency is more valuable as an investment than as a vehicle for economic transactions.

hndamien 10y ago
This is not how it works at all. Holders/ "hoarders" of Bitcoin do not decrease the utility of the network one iota. Because there is infinite divisibility, if I want to take some fiat and move it to another place via the network then return it to fiat at some arbitary price at a point in time, the fact people are holding (even if 99% of all Bitcoins were locked up) makes no difference to the utility of the network. All that has happened is that the decimal point has moved. What is happening is that supply is reduced. Demand has presumably remained the same as it otherwise would have been, and as a result the price rises. This is great for people holding, and it encourages more saving - but the rising tide is lifting for all boats here. For you who is just temporarily utilising the network, the fact that the price of Bitcoin might be ludicrously high (in your opinion) doesn't change the fact that you can utilise the advantages of a decentralised liberated money for your wealth movement at the same cost that it would have been if Bitcoin were at a low price.