Bitcoin seems to have already undergone a deflationary collapse. Its original goal of Internet money has been abandoned in favor of the concocted idea that it i

Bitcoin seems to have already undergone a deflationary collapse. Its original goal of Internet money has been abandoned in favor of the concocted idea that it is a "store of value." Unfortunately it's a poor store of value since it requires a constant stream of electricity to maintain. Gold, land, and other traditional idle stores of value just sit there and are free to maintain with the exception of the cost of physical security. On top of this Bitcoin is fragile as it requires an operating Internet or at least operating computers. In the event of a severe stress or collapse scenario it will cease to exist, while gold and other assets will continue to be viable units of tradable value. I still don't understand why significant deflation is a desirable characteristic for a currency. Mild deflation is tolerable unless the economy is experiencing hyper-growth like the early 20th century, but Bitcoin is more deflationary than gold. Strong economic arguments that I don't have time to type in can be made that an ideal currency (as a medium of exchange) is slightly inflationary (in the monetary base sense) to the degree that the economy as a whole is growing. Edit: collapse you say? But its value has held up! But this is exactly what happens (for a while) in a deflationary collapse. The value of money skyrockets but its velocity tanks. http://charts.woobull.com/bitcoin-velocity/ http://charts.woobull.com/bitcoin-velocity/ Of course given all of Bitcoin's undesirable characteristics as a store of value I suspect that its value in USD/EUR/etc. will eventually tank as well. This might take a while unless something causes a panic since the market for BTC is slow and thinly traded. IMHO all deflationary cryptocurrencies will undergo this kind of collapse. Of course not all cryptocurrencies need be deflationary. Software defined money can be programmed to do anything you want it to do within the bounds of what is possible under e.g. the CAP theorem and other relevant concepts from distributed systems. Cryptocurrency as a system is also inflationary in a whole-systems sense as new money can be created by forking a code base or creating a token on those coins (e.g. Ethereum) that support it. This argument holds as long as all these currencies are reasonably fungible without too much hassle. As it stands things like shapeshift.io make converting them fairly easy at least for the popular ones.