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Bitcoin is inherently deflationary...if the entire world moves to bitcoin, and somehow we prevented the extension of credit based on bitcoin collateral by finan
by thedudeabides5 6y ago
Bitcoin is inherently deflationary...if the entire world moves to bitcoin, and somehow we prevented the extension of credit based on bitcoin collateral by financial intermediaries...
Which is already happening.
Financial institutions are already extending credit (aka 'printing money') based on bitcoin and other cryptocoin collateral.
Bitcoin is not necessarily deflationary.
- Rury 6y agoI'm sorry but you seemingly contradict yourself: >we prevented the extension of credit based on bitcoin collateral... >Which is already happening. Is in direct contradiction to: >Financial institutions are already extending credit... Regardless, the amount of bitcoin is set to be capped and finite - therefore unless this changes it is inherently deflationary. Aside from mining out the remaining unmined bitcoin, no institution is "extending credit" (aka 'printing') bitcoin, they're extending credit via (as you mentioned): other collateral.
- thedudeabides5 6y agoThat's my point. You can't make more bitcoin, but if you extend credit to someone based on the bitcoin they have, that's CREATING NEW MONEY. In that sense, bitcoin is like gold. In the gold standard, the supply of gold was fixes, but the supply of dollars was not. Because bank's create money when they allow you to borrow. For bitcoin to be truly deflationary, you would have to prevent all financial institutions from extending credit
- RhodoGSA 6y agothis is a common misconception. Bitcoin is EVENTUALLY deflationary. Right now, about 900 coins are created every day leading to inflation of ~$45M a day that buying pressure needs to eat up. Every four years that inflation is cut in half, but it's still inflationary.