4 ms·

And he made a great mistake in that, by encouraging hoarding instead of spending.

by tedeh 9y ago

CryptoPunk 9y ago
The empirical evidence contradicts this theory. Transaction volumes doubled year over year until the block size limit was reached.
- rulum 9y ago
  Yeah but it was for speculative trading (and gambling, lots and lots of gambling sites), not for "using it" (to buy goods, exchange value). There is nothing to do with all those cryptocoins other than trading them between each other.
  - snikeris 9y ago
    When people spend cash at a casino they're not "using it"?
    - rulum 9y ago
      Yes they are, but if that cash only works across casinos (think casino tokens / chips) and nowhere else, would you take it seriously?
BLanen 9y ago
Pretty ironic. Making incentives to not spend 'cash'.
- GenericsMotors 9y ago
  21st century's version of the gold bug :)
benlorenzetti 9y ago
On the other hand this helped attract early investment and is a reason Bitcoin initially rose to such heights. There is nothing wrong with a deflationary currency once the rate of supply side deflation becomes small. Worthy investments will still be worthy investments and it helps the wealth of technological progress be distributed to the working class. Federal Reserve Notes are themselves arguably deflationary in nature except that remittance payments to citizens are taxed at 100%. Bitcoin has other problems though.
- rulum 9y ago
  I don't think bitcoin "rose to such heights" in terms of success. It appreciated in value arguably due to a speculation despite having no legitimate use (as of yet) due to its deflationary nature. So everyone wanted a piece of the pie before it ran out, the perceived scarcity drove people to get some and hoard. Hoard something that had no use. In my opinion, a future successful digital decentralised currency should find a way to prevent itself from being seen as an "investment opportunity". That is not what money is for. That attitude creates bubbles, and "get rich quick" types. You can't have functional money without price stability. The deflationary property of bitcoin works against that. So IMO bitcoin appreciating in value and creating bubbles along the way is not a good thing for bitcoin itself. You shouldn't need to "invest" in a currency, you need to use it. It needs to be trusted and accepted. Many people remember the million dollar pizza now. No one wants to be that guy. Even if BTC was universally accepted now, not many holders would dare to use it to buy things. Because in their mind, BTC is poised to appreciate in value whereas fiat will collapse, so they'd use their fiat instead. If you have $5 in one hand, and a lottery ticket with perceived high odds you bought for $5, and the store accepts both as payment, why would you use the lottery ticket to buy things?
  - benlorenzetti 9y ago
    I agree that bitcoins problems include not having relatively fixed-rate use cases in the future, like paying taxes and your salary. And you make a good point that it will be socially easier for society to adopt a new currency if early investors aren't getting 10x returns for being first. But any new currency is going to offer the opportunity for capital gains as long as it's competition includes the U.S. Dollar, because almost by definition a better alternative to the dollar would be deflationary relative to the dollar. My point is that small rates of deflation aren't bad in a currency and bitcoins fixed size is not really a problem as long as you can trade small enough increments. Also fixed size is not even deflationary, it's just fixed unless something beneficial happens on the demand side like manufacturing cars with less materials. At the same time fixed size is not really a feature though either. You have the whole number line available why not use it? Bitcoins real problem is that it's not a "victory against entropy" like gold coins were in ancient times or reserve notes which can appease Uncle Sam in the future are today. Bitcoin is quite the opposite in fact, because we are dissipaiting so much concentrated energy to maintain the system. It's ironic because bitcoins greatest success is making us imagine currencies that don't dissipate value. I'm pessimistic that there is a distributed solution to this beside just electricity or energy itself, and we're obviously not quite at that point technologically yet.

And he made a great mistake in that, by encouraging hoarding instead of spending.

by tedeh 9y ago

And he made a great mistake in that, by encouraging hoarding instead of spending.

The empirical evidence contradicts this theory. Transaction volumes doubled year over year until the block size limit was reached.

rulum 9y ago
Yeah but it was for speculative trading (and gambling, lots and lots of gambling sites), not for "using it" (to buy goods, exchange value). There is nothing to do with all those cryptocoins other than trading them between each other.
- snikeris 9y ago
  When people spend cash at a casino they're not "using it"?
  - rulum 9y ago
    Yes they are, but if that cash only works across casinos (think casino tokens / chips) and nowhere else, would you take it seriously?

BLanen 9y ago

Pretty ironic. Making incentives to not spend 'cash'.

GenericsMotors 9y ago
21st century's version of the gold bug :)

benlorenzetti 9y ago

On the other hand this helped attract early investment and is a reason Bitcoin initially rose to such heights. There is nothing wrong with a deflationary currency once the rate of supply side deflation becomes small. Worthy investments will still be worthy investments and it helps the wealth of technological progress be distributed to the working class. Federal Reserve Notes are themselves arguably deflationary in nature except that remittance payments to citizens are taxed at 100%. Bitcoin has other problems though.

rulum 9y ago
I don't think bitcoin "rose to such heights" in terms of success. It appreciated in value arguably due to a speculation despite having no legitimate use (as of yet) due to its deflationary nature. So everyone wanted a piece of the pie before it ran out, the perceived scarcity drove people to get some and hoard. Hoard something that had no use. In my opinion, a future successful digital decentralised currency should find a way to prevent itself from being seen as an "investment opportunity". That is not what money is for. That attitude creates bubbles, and "get rich quick" types. You can't have functional money without price stability. The deflationary property of bitcoin works against that. So IMO bitcoin appreciating in value and creating bubbles along the way is not a good thing for bitcoin itself. You shouldn't need to "invest" in a currency, you need to use it. It needs to be trusted and accepted. Many people remember the million dollar pizza now. No one wants to be that guy. Even if BTC was universally accepted now, not many holders would dare to use it to buy things. Because in their mind, BTC is poised to appreciate in value whereas fiat will collapse, so they'd use their fiat instead. If you have $5 in one hand, and a lottery ticket with perceived high odds you bought for $5, and the store accepts both as payment, why would you use the lottery ticket to buy things?
- benlorenzetti 9y ago
  I agree that bitcoins problems include not having relatively fixed-rate use cases in the future, like paying taxes and your salary. And you make a good point that it will be socially easier for society to adopt a new currency if early investors aren't getting 10x returns for being first. But any new currency is going to offer the opportunity for capital gains as long as it's competition includes the U.S. Dollar, because almost by definition a better alternative to the dollar would be deflationary relative to the dollar. My point is that small rates of deflation aren't bad in a currency and bitcoins fixed size is not really a problem as long as you can trade small enough increments. Also fixed size is not even deflationary, it's just fixed unless something beneficial happens on the demand side like manufacturing cars with less materials. At the same time fixed size is not really a feature though either. You have the whole number line available why not use it? Bitcoins real problem is that it's not a "victory against entropy" like gold coins were in ancient times or reserve notes which can appease Uncle Sam in the future are today. Bitcoin is quite the opposite in fact, because we are dissipaiting so much concentrated energy to maintain the system. It's ironic because bitcoins greatest success is making us imagine currencies that don't dissipate value. I'm pessimistic that there is a distributed solution to this beside just electricity or energy itself, and we're obviously not quite at that point technologically yet.