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You didn't address my argument. If bitcoin being deflationary would truly prevent people from buying things, then why doesn't it do so already? You can already

You didn't address my argument. If bitcoin being deflationary would truly prevent people from buying things, then why doesn't it do so already? You can already buy bitcoin instead of anything else you want to buy, so why do people buy things other than bitcoin? If you can explain why people might want other things more than they want bitcoin, you can explain why the existence of bitcoin won't prevent people from buying those things. And whether they already hold bitcoin or not is totally irrelevant.

imtringued 9y ago
I would say thanks to it's deflationary nature it is no longer a currency, just an investment.
- jstanley 9y ago
  You also haven't addressed my argument. It doesn't matter whether you call it a currency or investment. There are already things you can buy that are likely to go up in value over time, relative to the US dollar (e.g. stock market index funds). If the existence of those investments (that people can buy instead of other things) doesn't stop people from buying other things, why would a deflationary bitcoin stop people from buying other things?
  - vasilipupkin 9y ago
    people don't buy things by paying for them with US stock index funds. They pay for them with the cash portion of their portfolio. I mean sure, at some point they convert parts of their stock portfolio to cash. the reason it matters whether it is currency or an investment is, if it is an investment, then it should be valued on principles we use for valuing other investments.
    - jstanley 9y ago
      The only reason to hold off on purchases because you think your bitcoin will go up in value is because you think your bitcoin will go up in value. But that applies just as well even if you don't already own the bitcoin (you could just buy bitcoin instead of the other thing). Why does anyone buy anything that's not bitcoin? Because they want those things more than they want bitcoin. That doesn't stop being true just because you can pay for things in bitcoin. Identical reasoning applies if you replace "bitcoin" with anything else that you think is going to go up in value over time. And people still buy things. The sky isn't going to fall down!
      - vasilipupkin 9y ago
        It's not symmetric though. If I sell bitcoin to buy toothpaste, I will need to pay taxes and transaction costs, so I will probably just use cash to buy toothpaste, not bitcoin.
  - wpietri 9y ago
    Currency and investment are two totally different use cases. People's intentions and behaviors with respect to them are totally different.
ohashi 9y ago
It does, nobody actually uses bitcoin to buy things. The only people making money from bitcoin are exchanges and the speculators on the winning side of bets.
- alphydan 9y ago
  I regularly buy hosting, domains, hardware (heck, I bought some electronics which would be worth $50,000 today). I don't see a problem.
  - spelunker 9y ago
    > heck, I bought some electronics which would be worth $50,000 today You don't see that as a problem? Why buy things with BTC when it's better (for now) to just hold it?
    - ric2b 9y ago
      That is equivalent to saying: "Why buy anything at all when it's better to buy Bitcoin?" It's the same thing: opportunity cost of not owning Bitcoin (or any other investment). Each person decides how confortable they are with the risk.
      - spelunker 9y ago
        No it's not. I'm happy to buy things with my fiat currency because it's not increasing in value at astonishing rates. I'll just keep my bitcoins and cash out some when I want to buy stuff.
- jstanley 9y ago
  But people buy other things! Why don't they just buy bitcoin instead?
wpietri 9y ago
I don't think you actually have an argument. I think you are confused. Bitcoin's deflationary nature makes it bad as a currency. The rapid price gains do indeed prevent people from using it to buy things. Here, noted investor and Bitcoin proponent Fred Wilson has said he's stopped using it for commerce: http://avc.com/2017/08/store-of-value-vs-payment-system/ http://avc.com/2017/08/store-of-value-vs-payment-system/ This is in contrast with cash, which people don't hold on to in the same way. Nobody goes out to dinner and says, "I'm only getting a appetizer because this $20 bill will be worth more next week."
- jstanley 9y ago
  No, I think you are confused. Bitcoin already exists in the world. People can already buy bitcoin instead of other things, and yet people still buy other things. Why is that? Nobody says "I'm only getting a appetizer because if I invest the money instead this $20 will be worth more next week." Investments already exist and yet they don't stop people from spending on other things.
  - wpietri 9y ago
    The discussion is not about people randomly buying things higglety-pigglety. The specific point is "Doesn’t this completely undercut the idea of bitcoin as currency?" It does. Currencies are well-studied economic entities. So are investments. They have different purposes, and people behave differently with respect to them. You can feign ignorance of the two all you like, but that does not erase the difference. > Nobody says "I'm only getting a appetizer because if I invest the money instead this $20 will be worth more next week." People in fact do that all the time. People spend less so they can invest more. They trade currency for an asset whose value they expect to appreciate. If that asset does indeed appreciate, they are far more likely to hold onto it than cash, especially if they expect to it to appreciate yet more. I gave you a specific example of a prominent investor and Bitcoin advocate shifting from treating Bitcoin as a currency to treating it as an investment. Which you ignored, just like you're ignoring basics facts about finance.
    - 9y ago

imtringued 9y ago

I would say thanks to it's deflationary nature it is no longer a currency, just an investment.

jstanley 9y ago
You also haven't addressed my argument. It doesn't matter whether you call it a currency or investment. There are already things you can buy that are likely to go up in value over time, relative to the US dollar (e.g. stock market index funds). If the existence of those investments (that people can buy instead of other things) doesn't stop people from buying other things, why would a deflationary bitcoin stop people from buying other things?
- vasilipupkin 9y ago
  people don't buy things by paying for them with US stock index funds. They pay for them with the cash portion of their portfolio. I mean sure, at some point they convert parts of their stock portfolio to cash. the reason it matters whether it is currency or an investment is, if it is an investment, then it should be valued on principles we use for valuing other investments.
  - jstanley 9y ago
    The only reason to hold off on purchases because you think your bitcoin will go up in value is because you think your bitcoin will go up in value. But that applies just as well even if you don't already own the bitcoin (you could just buy bitcoin instead of the other thing). Why does anyone buy anything that's not bitcoin? Because they want those things more than they want bitcoin. That doesn't stop being true just because you can pay for things in bitcoin. Identical reasoning applies if you replace "bitcoin" with anything else that you think is going to go up in value over time. And people still buy things. The sky isn't going to fall down!
    - vasilipupkin 9y ago
      It's not symmetric though. If I sell bitcoin to buy toothpaste, I will need to pay taxes and transaction costs, so I will probably just use cash to buy toothpaste, not bitcoin.
- wpietri 9y ago
  Currency and investment are two totally different use cases. People's intentions and behaviors with respect to them are totally different.

ohashi 9y ago

It does, nobody actually uses bitcoin to buy things. The only people making money from bitcoin are exchanges and the speculators on the winning side of bets.

alphydan 9y ago
I regularly buy hosting, domains, hardware (heck, I bought some electronics which would be worth $50,000 today). I don't see a problem.
- spelunker 9y ago
  > heck, I bought some electronics which would be worth $50,000 today You don't see that as a problem? Why buy things with BTC when it's better (for now) to just hold it?
  - ric2b 9y ago
    That is equivalent to saying: "Why buy anything at all when it's better to buy Bitcoin?" It's the same thing: opportunity cost of not owning Bitcoin (or any other investment). Each person decides how confortable they are with the risk.
    - spelunker 9y ago
      No it's not. I'm happy to buy things with my fiat currency because it's not increasing in value at astonishing rates. I'll just keep my bitcoins and cash out some when I want to buy stuff.
jstanley 9y ago
But people buy other things! Why don't they just buy bitcoin instead?

wpietri 9y ago

I don't think you actually have an argument. I think you are confused. Bitcoin's deflationary nature makes it bad as a currency. The rapid price gains do indeed prevent people from using it to buy things. Here, noted investor and Bitcoin proponent Fred Wilson has said he's stopped using it for commerce: http://avc.com/2017/08/store-of-value-vs-payment-system/ http://avc.com/2017/08/store-of-value-vs-payment-system/ This is in contrast with cash, which people don't hold on to in the same way. Nobody goes out to dinner and says, "I'm only getting a appetizer because this $20 bill will be worth more next week."

jstanley 9y ago
No, I think you are confused. Bitcoin already exists in the world. People can already buy bitcoin instead of other things, and yet people still buy other things. Why is that? Nobody says "I'm only getting a appetizer because if I invest the money instead this $20 will be worth more next week." Investments already exist and yet they don't stop people from spending on other things.
- wpietri 9y ago
  The discussion is not about people randomly buying things higglety-pigglety. The specific point is "Doesn’t this completely undercut the idea of bitcoin as currency?" It does. Currencies are well-studied economic entities. So are investments. They have different purposes, and people behave differently with respect to them. You can feign ignorance of the two all you like, but that does not erase the difference. > Nobody says "I'm only getting a appetizer because if I invest the money instead this $20 will be worth more next week." People in fact do that all the time. People spend less so they can invest more. They trade currency for an asset whose value they expect to appreciate. If that asset does indeed appreciate, they are far more likely to hold onto it than cash, especially if they expect to it to appreciate yet more. I gave you a specific example of a prominent investor and Bitcoin advocate shifting from treating Bitcoin as a currency to treating it as an investment. Which you ignored, just like you're ignoring basics facts about finance.
  - 9y ago