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>What it has done is cause a collapse of the Bitcoin economy, i.e. the markets for real goods and services denominated in Bitcoin. Bitcoin has been extremely v

>What it has done is cause a collapse of the Bitcoin economy, i.e. the markets for real goods and services denominated in Bitcoin. Bitcoin has been extremely volatile it's entire existence, and yet many merchants adopted it as a payment method. I'll say it again, it's not "deflation" that's causing the collapse of bitcoin (although I'd argue it's not collapsing right now, but just struggling), it's the fact that a blockchain cannot scale at this time. Steam used bitcoin for years successfully, and only recently had to stop because of transaction fees. Microsoft used bitcoin for years happily, and only recently had to stop because of transaction fees. All of these companies that are no longer using bitcoin, cite transaction fees as the reason, not the "eventually deflationary" nature of it (which was always the case, even when they started using it). The blockchain as an idea cannot handle this kind of scale, and until that problem is solved, all decentralized cryptocurrencies will fail to get past this hard wall, whether deflationary or inflationary. Luckily there are many bright people working on this problem, both in bitcoin and in other altcoins, and I have hope that it will soon be solved, but until then cryptocurrencies will struggle to reach mass adoption.

JumpCrisscross 9y ago
> it's not "deflation" that's causing the collapse of bitcoin (although I'd argue it's not collapsing right now, but just struggling), it's the fact that a blockchain cannot scale at this time I agree. I'm only refuting the argument that Bitcoin is not deflationary.
- Klathmon 9y ago
  But by that definition bitcoin is inflationary depending on where you draw the lines. There was a period of about 3 years where bitcoin's value was dropping every day, and just this weekend it dropped 10-20%. How can "deflation" be a useful definition if it can apply or not depending on the ever changing value of an asset? or even what you compare the value against.
  - JumpCrisscross 9y ago
    > How can "deflation" be a useful definition if it can apply or not depending on the ever changing value of an asset? I responded to this question elsewhere [1]. TL; DR Economies can change modes. The American economy was hyper inflationary in the 1970s, then deflationary in the early 1980s and the flipped back to a long-run trend growth of inflation until the dot-com bust. The gold standard for measuring price level changes is to measure actual prices. The inscrutability of the Bitcoin economy forces the use of proxy metrics, e.g. the exchange rate between U.S. dollars and Bitcoins. This is appropriate given the entire legitimate Bitcoin economy is a subset of the U.S. dollar economy, with prices in Bitcoin often being pegged to an implied U.S. dollar price. [1] https://news.ycombinator.com/item?id=16097280 https://news.ycombinator.com/item?id=16097280
    - Klathmon 9y ago
      Fair enough. I still disagree that bitcoin being eventually limited in supply is a bad thing, but it appears that I have misunderstood the meaning of inflation and deflation, and I struggle to understand why the definition as you described it is useful. >This is appropriate given the entire legitimate Bitcoin economy is a subset of the U.S. dollar economy, with prices in Bitcoin often being pegged to an implied U.S. dollar price. I think this is a consequence of our language and location, as bitcoin is a global asset and therefore gets pegged against many other currencies across the planet. Still, I understand your point, and I appreciate the discussion!

JumpCrisscross 9y ago

> it's not "deflation" that's causing the collapse of bitcoin (although I'd argue it's not collapsing right now, but just struggling), it's the fact that a blockchain cannot scale at this time I agree. I'm only refuting the argument that Bitcoin is not deflationary.

Klathmon 9y ago
But by that definition bitcoin is inflationary depending on where you draw the lines. There was a period of about 3 years where bitcoin's value was dropping every day, and just this weekend it dropped 10-20%. How can "deflation" be a useful definition if it can apply or not depending on the ever changing value of an asset? or even what you compare the value against.
- JumpCrisscross 9y ago
  > How can "deflation" be a useful definition if it can apply or not depending on the ever changing value of an asset? I responded to this question elsewhere [1]. TL; DR Economies can change modes. The American economy was hyper inflationary in the 1970s, then deflationary in the early 1980s and the flipped back to a long-run trend growth of inflation until the dot-com bust. The gold standard for measuring price level changes is to measure actual prices. The inscrutability of the Bitcoin economy forces the use of proxy metrics, e.g. the exchange rate between U.S. dollars and Bitcoins. This is appropriate given the entire legitimate Bitcoin economy is a subset of the U.S. dollar economy, with prices in Bitcoin often being pegged to an implied U.S. dollar price. [1] https://news.ycombinator.com/item?id=16097280 https://news.ycombinator.com/item?id=16097280
  - Klathmon 9y ago
    Fair enough. I still disagree that bitcoin being eventually limited in supply is a bad thing, but it appears that I have misunderstood the meaning of inflation and deflation, and I struggle to understand why the definition as you described it is useful. >This is appropriate given the entire legitimate Bitcoin economy is a subset of the U.S. dollar economy, with prices in Bitcoin often being pegged to an implied U.S. dollar price. I think this is a consequence of our language and location, as bitcoin is a global asset and therefore gets pegged against many other currencies across the planet. Still, I understand your point, and I appreciate the discussion!