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The hard forks should have destroyed the notion that bitcoin is a deflationary currency. Anybody can double the number of coins on the market with enough suppor

The hard forks should have destroyed the notion that bitcoin is a deflationary currency. Anybody can double the number of coins on the market with enough support from miners. It seems like the price hasn’t taken notice of the fact that bitcoin isn’t a scarce commodity.

jstanley 9y ago
If I give you a jstanleytoken to go with every dollar you own, that has not increased the amount of dollars. A Bitcoin split doesn't create more Bitcoin, it just creates another currency.
- Lazare 9y ago
  There is certainly an argument to be made that, for many of the uses that people have for "bitcoins", BTC and BCH are close substitutes. Conversely, a "jstanleytoken" is probably not a close substitute for either BTC or BCH, and is certainly not a close substitute for dollars. Another way of looking at this is to observe the market cap of both currencies after a fork; in theory you'd expect the total market cap to remain unchanged, since the newly forked currency is presumably either worthless OR has worth only to the extent that it removes value from the original currency. In practice, this doesn't seem to be occurring.
  - ryanlol 9y ago
    >for many of the uses that people have for "bitcoins", BTC and BCH are close substitutes Sounds like nonsense to me. Practically nobody accepts BCH.
    - Lazare 9y ago
      Really? In my personal life I find that BCH and BTC are just as widely accepted. :) (...which is to say, precisely 0 vendors accept either, of course. Most people are not picking a crypto currency based on their ability to conveniently buy a coffee with it just yet.)
- cesarb 9y ago
  Playing devil's advocate: it doesn't create more Bitcoin, but it creates more "currency". Before the split, you had X oldBitcoin; after the split, you have X oldBitcoin + X newBitcoin. If a newBitcoin is worth 1/Y oldBitcoin, the effect should be as if the supply of oldBitcoin had increased by 1/Y.
  - rrobukef 9y ago
    But you can't say it is inflation because purchasing power didn't decrease. Theoretically the value of the old coin will be (Y-1)/Y so everybodies wealth increased by 1. If it's greater than 1 good! You can even call it deflation, let's hope it's stable. If it's less than 1 something went very very wrong with multiple possible reasons: let's hope killing one restores the balance.
- deleted 9y ago
  [deleted]
- pjc50 9y ago
  The entire "banks create money" argument is based around the question of whether a money-like obligation is in fact money. See the two different definitions of "money supply" in macroeconomics.
- mikeash 9y ago
  This doesn't seem to be quite the same. A Bitcoin fork is more like somehow giving everyone who holds dollars an equal number of jstanleytokens, and jstanleytokens can be passed around just like dollars and are still hard to counterfeit. My wallet with $50 in it now has $50 and 50 jstanleytokens. The corner store may not sell me a soda in exchange for jstanleytokens, so you haven't exactly increased the number of dollars in circulation, but it seems to me that you've done something that will have significant effects.
  - namelost 9y ago
    The value of a dollar only changes if some people decide they want a jstanleytoken more than they want a dollar (i.e they start to buy jstanleytokens). Otherwise the value of a jstanleytoken will remain at 0 and the value of a dollar will be unaffected.
    - mikeash 9y ago
      I don't see why you'd need jstanleytokens to be more desirable. They'd merely need to be desirable in some way. Let's say that the corner store arbitrarily decides that they'll accept jstanleytokens at 10% the value of a dollar. I can go buy my soda for 20 jstanleytokens, or whatever it would be, instead of $2. That decreases the demand for dollars, and thus the value of a dollar.
      - rrobukef 9y ago
        But since everybody got both they didn't lose anything: they got some jstanleycoins too (unless you were lending dollars, then you may not get them both back). So the wealth/spending power didn't decrease, there was no inflation.
        mikeash 9y ago
        I'd say there is inflation, just as there would be if everyone got two dollars for each dollar they hold. But the idea that people wouldn't lose anything is true. I think that "unless you were lending dollars" bit is a really important aspect of this, though. Lending happens a lot. This is true even in the Bitcoin world. We don't normally call it "lending," but that's what people do whenever they store coins on an exchange. This has been a major problem with these forks, too. You deposit some Bitcoin with an exchange, then there's a fork... do they owe you the forked currency as well, or not? There's no obvious answer to that.
taysic 9y ago
Anyone can but it still takes something significant to get traction - in this case it was a contentious difference in ideology. As long as a new token can fill a new need or niche, it can survive.

jstanley 9y ago

If I give you a jstanleytoken to go with every dollar you own, that has not increased the amount of dollars. A Bitcoin split doesn't create more Bitcoin, it just creates another currency.

Lazare 9y ago
There is certainly an argument to be made that, for many of the uses that people have for "bitcoins", BTC and BCH are close substitutes. Conversely, a "jstanleytoken" is probably not a close substitute for either BTC or BCH, and is certainly not a close substitute for dollars. Another way of looking at this is to observe the market cap of both currencies after a fork; in theory you'd expect the total market cap to remain unchanged, since the newly forked currency is presumably either worthless OR has worth only to the extent that it removes value from the original currency. In practice, this doesn't seem to be occurring.
- ryanlol 9y ago
  >for many of the uses that people have for "bitcoins", BTC and BCH are close substitutes Sounds like nonsense to me. Practically nobody accepts BCH.
  - Lazare 9y ago
    Really? In my personal life I find that BCH and BTC are just as widely accepted. :) (...which is to say, precisely 0 vendors accept either, of course. Most people are not picking a crypto currency based on their ability to conveniently buy a coffee with it just yet.)
cesarb 9y ago
Playing devil's advocate: it doesn't create more Bitcoin, but it creates more "currency". Before the split, you had X oldBitcoin; after the split, you have X oldBitcoin + X newBitcoin. If a newBitcoin is worth 1/Y oldBitcoin, the effect should be as if the supply of oldBitcoin had increased by 1/Y.
- rrobukef 9y ago
  But you can't say it is inflation because purchasing power didn't decrease. Theoretically the value of the old coin will be (Y-1)/Y so everybodies wealth increased by 1. If it's greater than 1 good! You can even call it deflation, let's hope it's stable. If it's less than 1 something went very very wrong with multiple possible reasons: let's hope killing one restores the balance.
deleted 9y ago
[deleted]
pjc50 9y ago
The entire "banks create money" argument is based around the question of whether a money-like obligation is in fact money. See the two different definitions of "money supply" in macroeconomics.
mikeash 9y ago
This doesn't seem to be quite the same. A Bitcoin fork is more like somehow giving everyone who holds dollars an equal number of jstanleytokens, and jstanleytokens can be passed around just like dollars and are still hard to counterfeit. My wallet with $50 in it now has $50 and 50 jstanleytokens. The corner store may not sell me a soda in exchange for jstanleytokens, so you haven't exactly increased the number of dollars in circulation, but it seems to me that you've done something that will have significant effects.
- namelost 9y ago
  The value of a dollar only changes if some people decide they want a jstanleytoken more than they want a dollar (i.e they start to buy jstanleytokens). Otherwise the value of a jstanleytoken will remain at 0 and the value of a dollar will be unaffected.
  - mikeash 9y ago
    I don't see why you'd need jstanleytokens to be more desirable. They'd merely need to be desirable in some way. Let's say that the corner store arbitrarily decides that they'll accept jstanleytokens at 10% the value of a dollar. I can go buy my soda for 20 jstanleytokens, or whatever it would be, instead of $2. That decreases the demand for dollars, and thus the value of a dollar.
    - rrobukef 9y ago
      But since everybody got both they didn't lose anything: they got some jstanleycoins too (unless you were lending dollars, then you may not get them both back). So the wealth/spending power didn't decrease, there was no inflation.
      - mikeash 9y ago
        I'd say there is inflation, just as there would be if everyone got two dollars for each dollar they hold. But the idea that people wouldn't lose anything is true. I think that "unless you were lending dollars" bit is a really important aspect of this, though. Lending happens a lot. This is true even in the Bitcoin world. We don't normally call it "lending," but that's what people do whenever they store coins on an exchange. This has been a major problem with these forks, too. You deposit some Bitcoin with an exchange, then there's a fork... do they owe you the forked currency as well, or not? There's no obvious answer to that.

taysic 9y ago

Anyone can but it still takes something significant to get traction - in this case it was a contentious difference in ideology. As long as a new token can fill a new need or niche, it can survive.