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21 million coins, ever, is going to seriously limit the utility of your currency. Wrong, it will increase asymptotically to 21 million bitcoins but not ever rea
by kiba 16y ago
21 million coins, ever, is going to seriously limit the utility of your currency.
Wrong, it will increase asymptotically to 21 million bitcoins but not ever reach 21 millions.
21 millions bitcoins that is divisible to the 8th place. Even if the 21 million limit starts to limit bitcoins' utility, it doesn't mean that people can't fork the network and the project to create their own currencies.
If the currency did succeed, the inability to increase circulation would result in a natural deflationary spiral over time.
Price deflation is a good thing. The computer industry are still thriving after enormous amount of price deflation. No amount of price deflation will incentivize people from not buying foods, or even video games and other recreational activities during period of which the purchasing power of money has gone up. They will delay consumption but only to a point. The time-preferences of human beings have a limit. They will not wait 24 years before eating 100,000,000 marshmallows as fast as they could.
so I guarantee that governments would not appreciate your utopian vision.
I don't take it for granted that bitcoin will succeed or will it be an easy road. There has been many such worries in the bitcoin community. Some bitcoiners may be idealistic or utopians but we're also realists.
Either the early bitcoiners become enormously wealthy or bitcoiners were all been fools. I don't know what is going to happen, but I hope that bitcoins will change the world for the better.
- btilly 16y agoPrice deflation is a good thing. I'm sorry, but this statement alone convinces me that there are important facts about economics which you do not understand. Deflation, among many other things, discourages investment. Without investment, economies stagnate.
- kiba 16y agoI'm sorry, but this statement alone convinces me that there are important facts about economics which you do not understand. Deflation, among many other things, discourages investment. Without investment, economies stagnate. It would be better to explain why my reasoning is fallacious rather than resorting to opaque statements like these.
- btilly 16y agohttp://lmgtfy.com/?q=deflation+discourages+investment http://lmgtfy.com/?q=deflation+discourages+investment
- kiba 16y agoResorting to let me google that for you to construct your reply mean you aren't taking me seriously. I am told that deflation is a bad thing actually assume many things to be true. 1. Deflation is the result of collapsing monetary base. However, the bitcoin economy isn't experiencing anything remotely similar to what you think is going to happen. The Bitcoin economy is experiencing growth deflation. 2. Assumption that retention of cash is not investment. To the holder of cash, it is an investment. The economy, on the other hand, see money retention as a forecast of time preference. Moverover, an inflationary regime favor investors and producers. A hard money regime like bitcoins favor the average joe who are consumer and savior of money.
- btilly 16y agoDeflation is the result of demand for money rising faster than supply. Look at a basic supply/demand curve for an explanation of this. The point about investment is that incentive to invest results in money being available for people who have the drive, energy and motivation to change the world to realize their dreams, even if they have not done it yet. If money is not available for investment those people's dreams get shattered before they change the world. This is a Bad Thing. (And generally results in a stagnant economy and persistently high unemployment.) The current experience of bitcoin should not be deflation for the simple reasons that bitcoins continue to be issued, and should be issued for very good reasons. You are right that an inflationary regime favors investors and producers. However it turns out that favoring investors and producers results in favoring the people who are most likely to result in investing in our future and producing things that make us all better off. Therefore favoring people who are trying to change the world for the better is a _Good Thing_ (tm).
- kiba 16y ago