4 ms·

I completely agree with you that the concentration of wealth in the hands of a tiny portion of the population is a huge problem today, but don't deflationary cr

by simias 9y ago

I completely agree with you that the concentration of wealth in the hands of a tiny portion of the population is a huge problem today, but don't deflationary cryptocurrencies make it objectively worse? At least if the current "1%" hoard dollars or euros in their mattress they slowly lose their wealth thanks to inflation. After a generation or two they'll have lost a significant share of their treasure. Therefore they have an incentive to actually invest the money to fight the effects of inflation. In doing so they contribute to the economy. With a deflationary currency like bitcoin it goes like this: 1/ Buy bitcoins 2/ Bury your keys in a bunker in Antartica 3/ There is no step 3, just watch as you become wealthier while doing absolutely nothing. You want a loan to start your business or buy a house? Well tough luck, you should have mined BTC in 2013. The deflationary nature of Bitcoin is why it managed to be successful in the first place, it gives a strong incentive to be an early adopter. However in the long term I don't see how it's sustainable, it makes it borderline useless as a currency. On the other hand I don't see how an inflationary cryptocurrency could gain traction if it's not backed by a huge entity such as a government or multinational company because who would bother buying SimiasCoin if you know it's going to lose value at a steady pace in the future? And why would a government or multinational corporation bother creating a cryptocurrency they can't easily control instead of printing bills like they do today?

keymone 9y ago
Bitcoin is inflationary at least nominally, until 2140.
- simias 9y ago
  That's definitely not what the overwhelming majority of people buying bitcoin today are counting on though. Like, at all. Otherwise "HODL" wouldn't be the meme it is. It doesn't make sense to hold inflationary currency.
  - keymone 9y ago
    I disagree. HODLing is a thing not primarily because hodlers believe in deflationary aspect of bitcoin, it’s because inflationary schedule is known beforehand and is not subject to change by bunch of central bankers and more importantly it’s the belief in that value will increase due to growing adoption.
    - simias 9y ago
      >it’s the belief in that value will increase due to growing adoption. Right, deflation. "In economics, deflation is a decrease in the general price level of goods and services.[1] Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the value of currency over time, but deflation increases it. This allows one to buy more goods and services than before with the same amount of currency." Merely increasing the number of available coin doesn't create inflation unless it matches the demand for it.
21 9y ago
> At least if the current "1%" hoard dollars or euros in their mattress they slowly lose their wealth thanks to inflation. Long story short, they don't.
- smokeyj 9y ago
  Not only that, things you need like energy food and education aren’t included in core inflation. So what happens is, the finance people use freshly printed money to buy up the things all the poor little people need. But let’s not call it speculation. Crypto is a democratizing force in a corrupt and unaccountable world.
  - simias 9y ago
    So your point is that the current system is broken because our currencies are not truly inflationary if you're super rich and powerful because you get to print money so we should switch to a currency that's deflationary by design so that they don't even have to bother printing money? How does that work? >Crypto is a democratizing force in a corrupt and unaccountable world. Assuming that cryptocurrencies are successful they might cause some turmoil in the top 1% as early adopters with thousands of BTCs become the new 1% and current rich people who missed the bus might drop among the pleb. But after this initial period what happens? People who HODLed thousands of BTC will be hugely rich and remain so, people who don't have a lot of money still have to pay for housing and food so they can't save money to bridge the gap. And I don't really see how Bitcoin are going to help with corruption and accountability when one of its main use cases today (beyond speculation) are powering online black markets.
    - smokeyj 9y ago
      > So your point is that the current system is broken because our currencies are not truly inflationary No, I'm arguing traditional currency is no longer necessary. Rich people don't own currency, they own assets. Currency is for poor schmucks who don't know how finance works. Currency is for a convenient way of taxing the masses and devaluing their life's savings at the behest of the 1%. What's the solution? Asset backed certificates. Store your savings in a diversified portfolio backed by the incredibly valuable "means of production". These certificates can be settled in real-time given their levels of liquidity. Merchants can sell things denominated in one asset, and customers can pay with arbitrary certificates (say, apple stock) - settlement occurs at transaction time instantly.

by simias 9y ago

keymone 9y ago

Bitcoin is inflationary at least nominally, until 2140.

simias 9y ago
That's definitely not what the overwhelming majority of people buying bitcoin today are counting on though. Like, at all. Otherwise "HODL" wouldn't be the meme it is. It doesn't make sense to hold inflationary currency.
- keymone 9y ago
  I disagree. HODLing is a thing not primarily because hodlers believe in deflationary aspect of bitcoin, it’s because inflationary schedule is known beforehand and is not subject to change by bunch of central bankers and more importantly it’s the belief in that value will increase due to growing adoption.
  - simias 9y ago
    >it’s the belief in that value will increase due to growing adoption. Right, deflation. "In economics, deflation is a decrease in the general price level of goods and services.[1] Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the value of currency over time, but deflation increases it. This allows one to buy more goods and services than before with the same amount of currency." Merely increasing the number of available coin doesn't create inflation unless it matches the demand for it.

21 9y ago

> At least if the current "1%" hoard dollars or euros in their mattress they slowly lose their wealth thanks to inflation. Long story short, they don't.

smokeyj 9y ago
Not only that, things you need like energy food and education aren’t included in core inflation. So what happens is, the finance people use freshly printed money to buy up the things all the poor little people need. But let’s not call it speculation. Crypto is a democratizing force in a corrupt and unaccountable world.
- simias 9y ago
  So your point is that the current system is broken because our currencies are not truly inflationary if you're super rich and powerful because you get to print money so we should switch to a currency that's deflationary by design so that they don't even have to bother printing money? How does that work? >Crypto is a democratizing force in a corrupt and unaccountable world. Assuming that cryptocurrencies are successful they might cause some turmoil in the top 1% as early adopters with thousands of BTCs become the new 1% and current rich people who missed the bus might drop among the pleb. But after this initial period what happens? People who HODLed thousands of BTC will be hugely rich and remain so, people who don't have a lot of money still have to pay for housing and food so they can't save money to bridge the gap. And I don't really see how Bitcoin are going to help with corruption and accountability when one of its main use cases today (beyond speculation) are powering online black markets.
  - smokeyj 9y ago
    > So your point is that the current system is broken because our currencies are not truly inflationary No, I'm arguing traditional currency is no longer necessary. Rich people don't own currency, they own assets. Currency is for poor schmucks who don't know how finance works. Currency is for a convenient way of taxing the masses and devaluing their life's savings at the behest of the 1%. What's the solution? Asset backed certificates. Store your savings in a diversified portfolio backed by the incredibly valuable "means of production". These certificates can be settled in real-time given their levels of liquidity. Merchants can sell things denominated in one asset, and customers can pay with arbitrary certificates (say, apple stock) - settlement occurs at transaction time instantly.