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Bitcoin in particular would have really benefited from some basic understanding of monetary economics. If you want it to be a currency, it needs to be able to

Bitcoin in particular would have really benefited from some basic understanding of monetary economics. If you want it to be a currency, it needs to be able to expand its supply to meet demand as a medium of exchange. Otherwise you get huge deflation. Instead, Bitcoin was designed to have a very finite amount of supply. And - shockingly - anyone trying to use it as a medium of currency would find that viewing the world through the lens of Bitcoin has been massively, hugely deflationary (meaning: the cost of a Bag Mac has fallen dramatically in terms of Bitcoin, as has your paycheck). That same 'feature' is what made it the darling of speculators. It's like the feature that makes it a dysfunctional currency is also what made it successful as a tool of speculation. That's not an indictment of crypto generally - hopefully other coins that were designed to more intelligently expand supply as the demand for them increased as a medium of exchange, and these other coins would exhibit more price stability, a core requirement of a functional currency. Crypto brings some great decentralized features, and its creators deserve credit for it. But combining that innovation with some understanding of monetary economics would truly unleash its potential as an alternative to state-sponsored currency.

throw0101a 6y ago
An observation from a paper I ran across: > An ECB publication states that bitcoin’s theoretical roots are in Austrian economics[11]. Bitcoin corresponds with Austrian economic ideas in that bitcoin was intended to provide a monetary alternative that is beyond the reach of governments to regulate. Bitcoin has correspondence with libertarian ideas, which have some relationship with Austrian ideas. In the USA, my experience is that bitcoin proponents appear to have obtained their theory from science-fiction, radical libertarian popular literature, anti- government/anti-tax activism, and often from nothing that is apparent except their own thoughts. * https://arxiv.org/pdf/1312.2048.pdf https://arxiv.org/pdf/1312.2048.pdf * https://arxiv.org/abs/1312.2048 https://arxiv.org/abs/1312.2048
opportune 6y ago
I agree with you, but Bitcoin is popular precisely because it’s a speculative tool. A cryptocurrency with more agreeable qualities for a currency couldn’t be a get rich quick scheme, so there is no demand for it.

throw0101a 6y ago

An observation from a paper I ran across: > An ECB publication states that bitcoin’s theoretical roots are in Austrian economics[11]. Bitcoin corresponds with Austrian economic ideas in that bitcoin was intended to provide a monetary alternative that is beyond the reach of governments to regulate. Bitcoin has correspondence with libertarian ideas, which have some relationship with Austrian ideas. In the USA, my experience is that bitcoin proponents appear to have obtained their theory from science-fiction, radical libertarian popular literature, anti- government/anti-tax activism, and often from nothing that is apparent except their own thoughts. * https://arxiv.org/pdf/1312.2048.pdf https://arxiv.org/pdf/1312.2048.pdf * https://arxiv.org/abs/1312.2048 https://arxiv.org/abs/1312.2048

opportune 6y ago

I agree with you, but Bitcoin is popular precisely because it’s a speculative tool. A cryptocurrency with more agreeable qualities for a currency couldn’t be a get rich quick scheme, so there is no demand for it.