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I might have considered this a good idea, before I played SecondLife with Linden dollars, or used points on Listia, or got gold on Gaia Online. The problem wit

by araneae 16y ago

I might have considered this a good idea, before I played SecondLife with Linden dollars, or used points on Listia, or got gold on Gaia Online. The problem with these virtual currencies so far is that they're very unstable and they suffer from quick and dramatic deflation and inflation (usually the latter) that makes them absolutely terrible as primary currencies if you don't want to starve to death. This isn't to say that gov't backed currencies don't have this problem; far from it: http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hyperinflation http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hype... Keeping currencies stable is very difficult, which means that I'm really nervous about any system that isn't well-established already. It's not a guarantee, but it's better than nothing.

gasull 16y ago
The problem with these virtual currencies so far is that they're very unstable and they suffer from quick and dramatic deflation and inflation (usually the latter) that makes them absolutely terrible as primary currencies What is different about Bitcoin is that the amount of it will be fixed, therefore no monetary inflation is really possible. That said, its value in dollars can depreciate if M3 in dollars + outstanding credit in dollars contracts. And this might happen in the following years since outstanding credit in dollars, with the exception of Government debt, is contracting. I think Bitcoin is a good idea but it solves a problem (hyperinflation) that we don't have right now. If we had hyperinflation Bitcoin would become the Napster of central banking.
- hugh3 16y ago
  What is different about Bitcoin is that the amount of it will be fixed, therefore no monetary inflation is really possible Until the day that everybody decides the bubble is over, at which point the value of the bitcoin drops to zero. But hey, you might make some real money in the meantime!
  - gasull 16y ago
    Until the day that everybody decides the bubble is over Same thing can happen with any fiat currency, like the dollar or the euro. Actually, the same thing can happen with any currency, period. Even with a gold-backed one. If science finds a way to make gold without mining it, gold would drop in value.
    - hugh3 16y ago
      True. All that gold and dollars have that bitcoins don't is hundreds and/or thousands of years of history and billions of people who think they're worth something.
- rmc 16y ago
  What is different about Bitcoin is that the amount of it will be fixed, therefore no monetary inflation is really possible. However there's another problem, deflation. The people who get in there first and generate loads of BitCoins will gradually get richer and richer if they just sit on their money and don't trade it. It seems unfair that someone who got in first gets to be rich in this new bitcoin world.

by araneae 16y ago

gasull 16y ago

The problem with these virtual currencies so far is that they're very unstable and they suffer from quick and dramatic deflation and inflation (usually the latter) that makes them absolutely terrible as primary currencies What is different about Bitcoin is that the amount of it will be fixed, therefore no monetary inflation is really possible. That said, its value in dollars can depreciate if M3 in dollars + outstanding credit in dollars contracts. And this might happen in the following years since outstanding credit in dollars, with the exception of Government debt, is contracting. I think Bitcoin is a good idea but it solves a problem (hyperinflation) that we don't have right now. If we had hyperinflation Bitcoin would become the Napster of central banking.

hugh3 16y ago
What is different about Bitcoin is that the amount of it will be fixed, therefore no monetary inflation is really possible Until the day that everybody decides the bubble is over, at which point the value of the bitcoin drops to zero. But hey, you might make some real money in the meantime!
- gasull 16y ago
  Until the day that everybody decides the bubble is over Same thing can happen with any fiat currency, like the dollar or the euro. Actually, the same thing can happen with any currency, period. Even with a gold-backed one. If science finds a way to make gold without mining it, gold would drop in value.
  - hugh3 16y ago
    True. All that gold and dollars have that bitcoins don't is hundreds and/or thousands of years of history and billions of people who think they're worth something.
rmc 16y ago
What is different about Bitcoin is that the amount of it will be fixed, therefore no monetary inflation is really possible. However there's another problem, deflation. The people who get in there first and generate loads of BitCoins will gradually get richer and richer if they just sit on their money and don't trade it. It seems unfair that someone who got in first gets to be rich in this new bitcoin world.