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From an economic perspective, you always have to ask: what are the incentives for someone to switch currencies. At first sight, it does not seem to matter much

by Hermel 9y ago

From an economic perspective, you always have to ask: what are the incentives for someone to switch currencies. At first sight, it does not seem to matter much which unit of account you are using. However, there is in fact a strong financial incentive for the young, working generation to switch to a new currency, thereby devaluing all the nominal savings of the old, retired generation. So even in a country like Switzerland, Bitcoin or another cryptocurrency could be used by the young to brake free from paying an unfairly large share of their income to the old.

KasianFranks 9y ago
It's simple, the crypto market rate beats the standard money market rate by leaps and bounds when the average consumer goes cash e.g. during the next downturn or bear market.
amelius 9y ago
> However, there is in fact a strong financial incentive for the young, working generation to switch to a new currency, thereby devaluing all the nominal savings of the old, retired generation. Huh? They could switch too. I don't see the advantage. Also, block chain is the perfect tool for governments to track their citizens' spendings.
nosuchthing 9y ago
a strong financial incentive for the young, working generation to switch to a new currency, thereby devaluing all the nominal savings of the old, retired generation. That's not how economics works. First, who is producing the new supply? How is the new supply being produced? Hopefully by them, and not a 3rd party that exploits the production and sale of this new medium... The reason proof of work coins have no inherent value, is because there's zero economic demand except from speculators. Coins are generated though software which has a measurable cost, and why would a vendor or nation state expose their real world assets to be traded for a database token produced though this software method? You can't just tell all the kids to start using seashells or cryptocoins for their money because it would have to equate or surpass the abilities of normal cash.. for both client and vendor. If anything, one can imagine a nation state issuing a protocol tied to their centralized treasury but that's not too different than using a debit card.
pjc50 9y ago
Changing your unit of account does not make a difference to your employer, your landlord, your utility company, or the shop you buy your groceries at.
Yizahi 9y ago
a) switch to a new currency b) thereby devaluing all the nominal savings of the old, retired generation In reality it won't work like that (A -> B). In this world you most likely will devalue net worth of 99% of people (poor) and prop up net worth of 1% of people (rich) simply because they OWN actual assets - whole factories and industries, mines, planes, ships, hotels, etc. everything that is bigger than a phone and more useful than a house. This move (if hypothetically it ever happened) will create even bigger disparity and faster than now, in years instead of decades.

by Hermel 9y ago

KasianFranks 9y ago

It's simple, the crypto market rate beats the standard money market rate by leaps and bounds when the average consumer goes cash e.g. during the next downturn or bear market.

amelius 9y ago

> However, there is in fact a strong financial incentive for the young, working generation to switch to a new currency, thereby devaluing all the nominal savings of the old, retired generation. Huh? They could switch too. I don't see the advantage. Also, block chain is the perfect tool for governments to track their citizens' spendings.

nosuchthing 9y ago

a strong financial incentive for the young, working generation to switch to a new currency, thereby devaluing all the nominal savings of the old, retired generation. That's not how economics works. First, who is producing the new supply? How is the new supply being produced? Hopefully by them, and not a 3rd party that exploits the production and sale of this new medium... The reason proof of work coins have no inherent value, is because there's zero economic demand except from speculators. Coins are generated though software which has a measurable cost, and why would a vendor or nation state expose their real world assets to be traded for a database token produced though this software method? You can't just tell all the kids to start using seashells or cryptocoins for their money because it would have to equate or surpass the abilities of normal cash.. for both client and vendor. If anything, one can imagine a nation state issuing a protocol tied to their centralized treasury but that's not too different than using a debit card.

pjc50 9y ago

Changing your unit of account does not make a difference to your employer, your landlord, your utility company, or the shop you buy your groceries at.

Yizahi 9y ago

a) switch to a new currency b) thereby devaluing all the nominal savings of the old, retired generation In reality it won't work like that (A -> B). In this world you most likely will devalue net worth of 99% of people (poor) and prop up net worth of 1% of people (rich) simply because they OWN actual assets - whole factories and industries, mines, planes, ships, hotels, etc. everything that is bigger than a phone and more useful than a house. This move (if hypothetically it ever happened) will create even bigger disparity and faster than now, in years instead of decades.