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It's solving the problem that currency, up until now, has never had a finite supply, and that even currencies with limited supply could be forged, seized or inf
by sparkie 8y ago
It's solving the problem that currency, up until now, has never had a finite supply, and that even currencies with limited supply could be forged, seized or inflated until they became worthless. Bitcoin is the first money ever, which nobody can create beyond the very predictable initial distribution programmed into the system.
Gresham's law roughly states that when two kinds of money exist, people will stash the good money, and will trade with the bad money until it becomes useless. It's been proven time over throughout history. You only need to look at the gold rush that happened during the last financial crisis.
Given that Bitcoin is the best money that has ever existed, then anyone who is paying attention is stashing it while they're trading with anything else. The next recession won't be a rush for gold.
- pjc50 8y agoThis isn't even true for bitcoin; anyone can fork it, there has been at least one fork already, and the miners can easily decide to hardfork across to keep the block rewards going when they run out. It doesn't help that the miners are increasingly cartelised.
- beaner 8y agoHard forking Bitcoin doesn't increase Bitcoin's supply.
- sparkie 8y agoIf miners attempted to hard-fork in inflation, do you think users would follow their chain? It was already attempted on the first halving from 50BTC to 25BTC. Guess which one won? Miners don't make the rules. They enforce them. The network of economic users decide the rules that they are willing to validate in their software client.
- bduerst 8y agoThis fact makes bitcoin even more dangerous. Miners are only going to fork the network in a direction that benefits them, sometimes at the expense of everyone else and the network. This is called tragedy of the commons, and the block-size debacle is an example of that.
- sparkie 8y agoThe only direction that benefits miners is the direction where they have the maximum potential for profit by selling the coins they earn through transaction fees. This will inevitably be the network which most people are transacting on. The actual incentives are a bit skewed currently because transaction fees are dwarfed by the block subsidy.
- bduerst 8y agoRiiiight, and fisherman only fish the species that are most prevalent in the sea. You don't know how tragedy of the commons works, do you?
- simias 8y agoYou can't just make wild claims like that without providing a coherent argument and expect people to blindly believe you. I actually had to re-read your comment a few times to figure out if it was some kind of satire of cryptozealotry. In your comment you state, without any source or reasoning behind your claims, that: - Finite supply of currency is good - Inflation is bad - Bitcoin is "best money" - Everything else is bad money What about the fact that deflation means that people are incentivized to stash money instead of spending it (something you admit doing yourself)? What about the fact that it means that the rich becomes richer while doing nothing while the poor can't make money because nobody wants to spend it? Don't let greed blind you. How does society work if your main form of currency is meant to be "hodled" and people who spend it are ridiculed as suckers? Bitcoin is currently near-useless as a currency because it's mostly an asset for speculation. How is that going to change in the value of bitcoins keeps increasing by virtue of being artificially capped? That's what kills cryptocurrencies: you need the deflation to reward early adopters but in the end it means that your currency is effectively unusable as a currency.
- sparkie 8y ago> In your comment you state, without any source or reasoning behind your claims, that: > - Finite supply of currency is good > - Inflation is bad > - Bitcoin is "best money" > - Everything else is bad money My arguments aren't based on feels about what one might think as "good" or "bad", but just based on the undeniable fact that people are self interested. If it's a choice between holding my assets in a currency where they won't be devalued, and holding them in another where they will lose 1% or 2% annually, which am I going to chose? The people who care about the rich getting richer are really complaining that they aren't getting richer by the same ratio. They obviously won't if they think that the second option was a better choice. The rich already get richer. If they have money, they will invest it into other assets which offer them various levels of return, some more risky than others. People without money are traditionally excluded from these kinds of investment, and thus, their only for saving for the future is to put money into a bank account and let it have less purchasing power than the labour they put in to earn it in the first place. Bitcoin changes that completely. Anyone, even low-income earners, can put small amounts into Bitcoin and it will retain value in the longer term. They can completely shift their mental mode from high time preference into low time preference and begin investing in their own future. The idea that everyone needs to spend spend spend is not grounded in reality. It's necessary for governments to continue their bad policy making which only enriches the elite who print the money. High time preference is the source of inefficiencies, cutting corners and high debt. People should save rather than spend. People should spend more wisely in ways that are an investment into their own, and their descendants future, rather than borrowing from their children's labour through debt.
- nradov 8y agoWhat you're describing as a "problem" with regular currency isn't actually a problem at all. The ability to control the money supply and scale it up or down based on economic conditions is a valuable feature.
- hndamien 8y agoValuable to whom?
- m-i-l 8y ago> "Gresham's law ... Bitcoin is the best money that has ever existed" I think Gresham's Law has been showing us the exact opposite point with cryptocurrencies as a whole - cryptocurrencies are the "bad money" with no inherent value, i.e. no use case yet other than speculation, so people have been trading them away for "good money" (fiat), leading most cryptocurrencies on a long term trend towards zero. The only thing propping up Bitcoin is its pyramid scheme design (disproportionately rewarding early adopters and requiring them to constantly seek new scheme members to counteract its deflationary nature), so the small number of people with almost all the wealth are massively incentivised to protect their wealth by investing in pro-crypto projects, pro-crypto press etc. to convince as many people as possible that it is the "the future of money", "the best money that has ever existed", etc.