4 ms·
A currency is a "medium of exchange," i.e. you can use it to buy and sell stuff. If your "currency" might buy 20% more stuff tomorrow (like Bitcoin, sometimes)
by username223 9y ago
A currency is a "medium of exchange," i.e. you can use it to buy and sell stuff. If your "currency" might buy 20% more stuff tomorrow (like Bitcoin, sometimes), you won't use it to buy that stuff today. Instead, you will hoard it and use something with a more stable value to buy stuff.
- colordrops 9y agoMaybe not "buying stuff" unless you truly need it would be a boon to the environment. Endless growth is for cancer, not the economy.
- username223 9y agoAgreed, but I kinda like buying food and shelter, and it's much easier to do so with dollars or euros than with barter goods or magic digital beans.
- darawk 9y agoYes, that is the standard econ. argument. I'm not completely certain that I buy it, though. Yes, people may wait to buy things. But ultimately people still want to consume stuff. If they time shift that consumption, who cares? What good is wealth un-utilized?
- username223 9y agoLet's say you own a pile of X. If the value of X only fluctuates a few percent per year, like a major currency, you will freely trade your X for stuff, because you can always get more or less the same amount of stuff in the future. But if the value of X is changing 10% or more per year (or per day), you will either exchange as little X as possible if it's going up, or dump it all if it's going down.
- darawk 9y agoThat's only true if you have the expectation that that volatility will settle in the future, though.