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Re price stability: A cryptocurrency adopted on a mainstream level (at tens of trillions of dollars market cap) for means of everyday payment would be very stab

by nadam 9y ago

Re price stability: A cryptocurrency adopted on a mainstream level (at tens of trillions of dollars market cap) for means of everyday payment would be very stable, more stable than any fiat today. Re effectiveness: Bitcoin itself is not really fast, scalable and transaction fees are not that small anymore, but something like Dash for example can be much more effective than Fiat even at a large scale. (I mean small latency, small transaction fees, high throughput.) Should scalability become a really big issue, I am sure it will be solved by some projects. (There are already projects working on extreme high throughput like EOS.)

once_inc 9y ago
The lightning network is one of the proposed solutions for scaling bitcoin further.
littlestymaar 9y ago
> Re price stability: A cryptocurrency adopted on a mainstream level (at tens of trillions of dollars market cap) for means of everyday payment would be very stable, more stable than any fiat today. This sentence sounds like preaching. Do you have any evidence of this ? IMO this is really unlikely because you can't dynamically adapt the supply of money. See my other comment in this thread[1]. [1] https://news.ycombinator.com/item?id=15481953 https://news.ycombinator.com/item?id=15481953
- nadam 9y ago
  "This sentence sounds like preaching." Yes, you are right, I was wondering whether to edit that sentence to sound less confident. :) I have no evidence, and I am not an expert on this. I just think that if a currency is a utility currency, actually used by merchants and everyday users globally across a wide range of industries, countries and people, it has a huge market cap (it is the dominant currency of the world): I just don't see what could cause big fluctuations in its 'price'. (When you start to be the dominant currency 'price' becomes an interesting concept, because the 'relative to what?' aspect starts to be very significant.)
  - pjc50 9y ago
    The expansion and contraction of the real economy causes a change in the demand for money, resulting in changes in the price level. This is usually summarised in the equation "MV=PQ"; see the economics literature for more detail on this. (This is independent of what the money actually is, and was a big problem with price fluctuations under the gold standard)
    - nadam 9y ago
      Let's say we have a huge global cryptocurrency, that the whole world uses. If I understand well, when the economy expands, you can buy more BigMac for one unit, when the economy shrinks, you can buy less BigMac for one unit. What I am wondering now is whether is it something that needs to be avoided at all, (or can it be avoided in the long term at all).
      - littlestymaar 9y ago
        For bigmac it's not a big deal, but for investment it is. Imagine your company have 10 millions in cash, you could invest on a new machine to produce more (or better quality, or cheaper). But if you knew that the machine was going to cost you only 9 millions in 3 months. Will you buy it now even though you know it's only going to make you earn 300k in 3 months ? Of course not, you'll wait those 3 months. This is the problem with deflation, nobody wants to invest and people delay or reduce consumption. this really harms the economy.
        paulgb 9y ago
        The Capitol Hill Babysitting Co-op is sometimes cited as an example of this. https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op
        littlestymaar 9y ago
        Never heard of that, thank you !
Spivak 9y ago
In your hypothetical wouldn't BTC would have to be at least as volatile as the world's RGDP?

by nadam 9y ago

once_inc 9y ago

The lightning network is one of the proposed solutions for scaling bitcoin further.

littlestymaar 9y ago

> Re price stability: A cryptocurrency adopted on a mainstream level (at tens of trillions of dollars market cap) for means of everyday payment would be very stable, more stable than any fiat today. This sentence sounds like preaching. Do you have any evidence of this ? IMO this is really unlikely because you can't dynamically adapt the supply of money. See my other comment in this thread[1]. [1] https://news.ycombinator.com/item?id=15481953 https://news.ycombinator.com/item?id=15481953

nadam 9y ago
"This sentence sounds like preaching." Yes, you are right, I was wondering whether to edit that sentence to sound less confident. :) I have no evidence, and I am not an expert on this. I just think that if a currency is a utility currency, actually used by merchants and everyday users globally across a wide range of industries, countries and people, it has a huge market cap (it is the dominant currency of the world): I just don't see what could cause big fluctuations in its 'price'. (When you start to be the dominant currency 'price' becomes an interesting concept, because the 'relative to what?' aspect starts to be very significant.)
- pjc50 9y ago
  The expansion and contraction of the real economy causes a change in the demand for money, resulting in changes in the price level. This is usually summarised in the equation "MV=PQ"; see the economics literature for more detail on this. (This is independent of what the money actually is, and was a big problem with price fluctuations under the gold standard)
  - nadam 9y ago
    Let's say we have a huge global cryptocurrency, that the whole world uses. If I understand well, when the economy expands, you can buy more BigMac for one unit, when the economy shrinks, you can buy less BigMac for one unit. What I am wondering now is whether is it something that needs to be avoided at all, (or can it be avoided in the long term at all).
    - littlestymaar 9y ago
      For bigmac it's not a big deal, but for investment it is. Imagine your company have 10 millions in cash, you could invest on a new machine to produce more (or better quality, or cheaper). But if you knew that the machine was going to cost you only 9 millions in 3 months. Will you buy it now even though you know it's only going to make you earn 300k in 3 months ? Of course not, you'll wait those 3 months. This is the problem with deflation, nobody wants to invest and people delay or reduce consumption. this really harms the economy.
      - paulgb 9y ago
        The Capitol Hill Babysitting Co-op is sometimes cited as an example of this. https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op
        littlestymaar 9y ago
        Never heard of that, thank you !

Spivak 9y ago

In your hypothetical wouldn't BTC would have to be at least as volatile as the world's RGDP?