3 ms·
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?
by 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 agoIf 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 agoBut 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 agoObviously deflationary. What's your point?
- lifty 9y agoI 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 agoLike 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.