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>They are all deeply flawed as currencies because they are scientific in nature rather than economic. I don't think I disagree with what you mean, I think I di

>They are all deeply flawed as currencies because they are scientific in nature rather than economic. I don't think I disagree with what you mean, I think I disagree with the notions that these are mutually exclusive. To echo Margaret Thatcher's (I know) final words in office, there is no such thing as apolitical money. I don't believe there can be a world in which economics is divorced from politics in any way, I think society must occasionally make political decisions about economics. I agree with your points pragmatically though, which perhaps is where you're grounding everything? Do you mean that having a forced deflation with cryptographic mathematics is a flaw? I don't really understand why a finite amount of currency would be an issue if the number of units scales beyond what the entire world's traditional currencies contain combined. It's just a cryptographically enforced trust network to not print money when you decide you want to print money.

zanny 9y ago
> these are mutually exclusive. I wouldn't say they are, better wording would have been that they were developed for scientific purposes first, caring of the technical, before concern for the economic ramifications set in. > a finite amount of currency It is a matter of incentives. Right now, anyone holding most fiats in the world is incentivized by their controlled inflation to spend the money - and if they don't, it has negative economic ramifications because money that stops circulating (also known as a drop in monetary velocity) is effectively lost productivity until it reenters circulation. Traditionally, no millionaire just stuffed their mattress with Benjamins, but we are now seeing corporations effectively do this by sitting on hundreds of billions in cash offshore. The economic impact, however, is the same - money stops moving, and slows the economy because its not being spent. As money slows down, it increases scarcity, and you can quickly have a runaway deflationary spiral where the money keeps getting scarcer and scarcer thus incentivizing people to hoard it more and more while the economy stalls out. I should disclaim this is independent of how bitcoin (and ether, doge, ltc, etc) naturally deflates through market adoption. All those currencies either have decreasing or static minting of coinage, which means that every new entrant to the market by definition increases scarcity of the coin and drives prices up. This, again, has a runaway effect evidenced by how almost everyone uses bitcoin - as a store of value, not as a means of exchange. Because simultaneously fees are high and transactions are slow, and the money is appreciating over time as more and more people start using it. Your point relates back to my premise - technically, a finite money is fine as long as its highly divisible, like bitcoin is. The theory is that as the price goes up people just deal in smaller coin denominations. The problem is that doesn't address the economic incentives structure around appreciating currencies, which disincentivizes spending them. > It's just a cryptographically enforced trust network to not print money when you decide you want to print money. It isn't about one person having minting powers. The whole point is trustlessness. But you can still have all the promising aspects of cryptocurrencies (public ledger, trustless transactions, theoretically low response time with low fees, pseudonymity) while also having the coinage algorithm adapt to money velocity in the economy to attempt to push incentives towards spending rather than investing when they need to be so pushed.

zanny 9y ago

> these are mutually exclusive. I wouldn't say they are, better wording would have been that they were developed for scientific purposes first, caring of the technical, before concern for the economic ramifications set in. > a finite amount of currency It is a matter of incentives. Right now, anyone holding most fiats in the world is incentivized by their controlled inflation to spend the money - and if they don't, it has negative economic ramifications because money that stops circulating (also known as a drop in monetary velocity) is effectively lost productivity until it reenters circulation. Traditionally, no millionaire just stuffed their mattress with Benjamins, but we are now seeing corporations effectively do this by sitting on hundreds of billions in cash offshore. The economic impact, however, is the same - money stops moving, and slows the economy because its not being spent. As money slows down, it increases scarcity, and you can quickly have a runaway deflationary spiral where the money keeps getting scarcer and scarcer thus incentivizing people to hoard it more and more while the economy stalls out. I should disclaim this is independent of how bitcoin (and ether, doge, ltc, etc) naturally deflates through market adoption. All those currencies either have decreasing or static minting of coinage, which means that every new entrant to the market by definition increases scarcity of the coin and drives prices up. This, again, has a runaway effect evidenced by how almost everyone uses bitcoin - as a store of value, not as a means of exchange. Because simultaneously fees are high and transactions are slow, and the money is appreciating over time as more and more people start using it. Your point relates back to my premise - technically, a finite money is fine as long as its highly divisible, like bitcoin is. The theory is that as the price goes up people just deal in smaller coin denominations. The problem is that doesn't address the economic incentives structure around appreciating currencies, which disincentivizes spending them. > It's just a cryptographically enforced trust network to not print money when you decide you want to print money. It isn't about one person having minting powers. The whole point is trustlessness. But you can still have all the promising aspects of cryptocurrencies (public ledger, trustless transactions, theoretically low response time with low fees, pseudonymity) while also having the coinage algorithm adapt to money velocity in the economy to attempt to push incentives towards spending rather than investing when they need to be so pushed.