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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 latt
by 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 agoWhat 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 agoUntil 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 agoTrue. 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 agoWhat 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.