4 ms·

Why are people so obsessed with stability? Prices can float freely.

brucephillips 9y ago
Currencies, at least traditionally, are a store of value. You don't want stores of values to be volatile. Though I suppose the end game for BTC could be a transfer mechanism that no one actually holds. It would still be subject to flash crashes, though.
- Frogolocalypse 9y ago
  As a person who uses bitcoin as a store of value, i am quite ok with it being worth 10x what it was less than a year ago. More volatility for me please.
  - throwaway2048 9y ago
    you might be a lot less happy when that means 1/10th of the value.
    - Frogolocalypse 9y ago
      If i were you I'd be dumping my USD then.
- brndnmtthws 9y ago
  Which is better, a currency that's guaranteed to decrease in value over time, or one with a fixed supply that has historically increased in value consistently? I think with the volatility everything tends to average out. And the economic theory that currency must be inflationary is widely accepted as correct, but I don't really understand why or what the first principles are behind that claim.
  - brucephillips 9y ago
    If you're explicitly asking about USD vs. BTC, I'll definitely take USD, which has a strong history of stability. BTC certainly doesn't have that. Maybe BTC is going to appreciate or stabilize for the next century, but why would I risk that?
    - lifty 9y ago
      But consider the hypothetical scenario, where you have two currencies that have been around for the same amount of time, with similar reputations. One is inflationary and one is deflationary. Which one would you choose to save your wealth in?
      - brucephillips 9y ago
        Obviously deflationary. What's your point?
        lifty 9y ago
        I was alluding to your comment regarding price history and track record. People put their money in bitcoin (and other assets) based on future expectations. It's very risky now because we don't know if it will deliver on it's potential, but it definitely has some attractive features.
        emodendroket 9y ago
        Like several other people in this discussion, you point to the deflationary nature of Bitcoin as a positive. I do not doubt Bitcoin would be deflationary if widely used, but what I do doubt is that an economy that converted to a deflationary form of currency would be anything other than miserable for most people.
- lifty 9y ago
  Currencies are the store of value of poor people, because unfortunately they don't have the sophistication to manage their wealth using assets that don't loose their value. And that is unfortunate because they are taxed the most by the continuous devaluation of currencies. Wealthy people avoid the devaluation of their wealth through various sophisticated method, which leads to increasing inequality. Of course, this is only one perspective in the nebulous economic system.
  - brucephillips 9y ago
    I suppose directly most people don't store value in currencies, but indirectly, they definitely do. Bonds are denominated in currency, and the value of stocks are derived from companies that hold assets in largely cash and bonds.
    - lifty 9y ago
      Perhaps a lot of people own houses too, but still, I think the majority of people don't even own bonds or stocks (which can have a return). I think US people are more sophisticated when it comes to using financial tools but my impression is that in Europe most people have no clue about investing their money besides buying a house. Hell, most of my peers in my generation barely have any savings.
      - philipwhiuk 9y ago
        Most people have some kind of pension and most work pensions are invested in some kind of diversified portfolio involving stocks and bonds.
      - emodendroket 9y ago
        Around half of Americans own stock. http://news.gallup.com/poll/190883/half-americans-own-stocks-matching-record-low.aspx http://news.gallup.com/poll/190883/half-americans-own-stocks... > my impression is that in Europe most people have no clue about investing their money besides buying a house. Hell, most of my peers in my generation barely have any savings. If there are more Americans in the stock market it's probably because the American social safety net is very weak.
- azernik 9y ago
  And also a unit of account, which you definitely want to be stable.
otterley 9y ago
Because this: https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
- brndnmtthws 9y ago
  Another great example for why you should use Bitcoin.

Currencies, at least traditionally, are a store of value. You don't want stores of values to be volatile. Though I suppose the end game for BTC could be a transfer mechanism that no one actually holds. It would still be subject to flash crashes, though.

Frogolocalypse 9y ago
As a person who uses bitcoin as a store of value, i am quite ok with it being worth 10x what it was less than a year ago. More volatility for me please.
- throwaway2048 9y ago
  you might be a lot less happy when that means 1/10th of the value.
  - Frogolocalypse 9y ago
    If i were you I'd be dumping my USD then.
brndnmtthws 9y ago
Which is better, a currency that's guaranteed to decrease in value over time, or one with a fixed supply that has historically increased in value consistently? I think with the volatility everything tends to average out. And the economic theory that currency must be inflationary is widely accepted as correct, but I don't really understand why or what the first principles are behind that claim.
- brucephillips 9y ago
  If you're explicitly asking about USD vs. BTC, I'll definitely take USD, which has a strong history of stability. BTC certainly doesn't have that. Maybe BTC is going to appreciate or stabilize for the next century, but why would I risk that?
  - lifty 9y ago
    But consider the hypothetical scenario, where you have two currencies that have been around for the same amount of time, with similar reputations. One is inflationary and one is deflationary. Which one would you choose to save your wealth in?
    - brucephillips 9y ago
      Obviously deflationary. What's your point?
      - lifty 9y ago
        I was alluding to your comment regarding price history and track record. People put their money in bitcoin (and other assets) based on future expectations. It's very risky now because we don't know if it will deliver on it's potential, but it definitely has some attractive features.
        emodendroket 9y ago
        Like several other people in this discussion, you point to the deflationary nature of Bitcoin as a positive. I do not doubt Bitcoin would be deflationary if widely used, but what I do doubt is that an economy that converted to a deflationary form of currency would be anything other than miserable for most people.
lifty 9y ago
Currencies are the store of value of poor people, because unfortunately they don't have the sophistication to manage their wealth using assets that don't loose their value. And that is unfortunate because they are taxed the most by the continuous devaluation of currencies. Wealthy people avoid the devaluation of their wealth through various sophisticated method, which leads to increasing inequality. Of course, this is only one perspective in the nebulous economic system.
- brucephillips 9y ago
  I suppose directly most people don't store value in currencies, but indirectly, they definitely do. Bonds are denominated in currency, and the value of stocks are derived from companies that hold assets in largely cash and bonds.
  - lifty 9y ago
    Perhaps a lot of people own houses too, but still, I think the majority of people don't even own bonds or stocks (which can have a return). I think US people are more sophisticated when it comes to using financial tools but my impression is that in Europe most people have no clue about investing their money besides buying a house. Hell, most of my peers in my generation barely have any savings.
    - philipwhiuk 9y ago
      Most people have some kind of pension and most work pensions are invested in some kind of diversified portfolio involving stocks and bonds.
    - emodendroket 9y ago
      Around half of Americans own stock. http://news.gallup.com/poll/190883/half-americans-own-stocks-matching-record-low.aspx http://news.gallup.com/poll/190883/half-americans-own-stocks... > my impression is that in Europe most people have no clue about investing their money besides buying a house. Hell, most of my peers in my generation barely have any savings. If there are more Americans in the stock market it's probably because the American social safety net is very weak.
azernik 9y ago
And also a unit of account, which you definitely want to be stable.

otterley 9y ago

Because this: https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

brndnmtthws 9y ago
Another great example for why you should use Bitcoin.