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isn't a dollar or euro merely a deflationary currency that follows the velocity of money principle albeit controlled by the government and when the velocity is
by zoloateff 9y ago
isn't a dollar or euro merely a deflationary currency that follows the velocity of money principle albeit controlled by the government and when the velocity is slow they print more?
- rthomas6 9y agoNot exactly. First of all the currencies aren't deflationary, they're slightly inflationary, meaning they lose value over time. Deflationary currencies are considered very bad if a government holds much debt at all. Inflationary currencies incentivize spending over holding. Second of all they don't just look at velocity of money, they also look at the economy's strength, demand for money and lending, consumer prices indicies, and other things that are tied to external metrics and thus need a centralized authority to use. For a cryptocurrency, we can't do this, we have to rely on some algorithm. Tying creation rate to velocity of money seems like a decent approximation to me, but I could be dead wrong.