4 ms·

It is rather a promise of an "eventual stability". Thinking through that lens, I think USD (and other Fiat currencies) are the ones exhibiting instability.

coinward 6y ago
fiat is volatile and loses purchasing power by design. gross!
PragmaticPulp 6y ago
There is no objective measure by which Bitcoin is more stable than USD. The idea that USD is becoming worthless due to recent monetary policy, however ill-advised, is greatly exaggerated. The idea that Bitcoin is the only way to protect oneself against inflation is also greatly exaggerated. Investors have been buying assets and investments for a long time before Bitcoin was invented to avoid inflation. Bitcoin didn't magically change that.
- coinward 6y ago
  unexpected inflation is just so unexpected. its not that Bitcoin is the only option, its just the best option which is why its emerging as money
sytelus 6y ago
BTC cannot be stable, even eventually. There is no way to increase the BTC supply so when productivity increases, prices of goods (expressed in BTC) will always go up. Assume that BTC is the only currency and world productivity goes up 6% each year, or 0.5% each month. Then when you go in store to buy apple, you will see price gone up by 0.5% than previous month because there is no way to increase money supply. One of the advantage of fiat currency is that you can control the money supply and try to keep prices stable. For BTC, there is no way out either way. The worse case occurs when some economic disaster strikes like subprime mortgage. In that case there is no way to fix the issue and massive uncontrolled depression will trigger and can stay for decades whether you like it or not. In other words, the same things that makes BTC as good store of value, makes it a extremely weak to guarantee stable economy.
- andrepd 6y ago
  Ahaha, I'm literally listening to a talk by Yanis Varoufakis right now and not 5mins ago he mentioned this as the reason non-fiat money, be it gold standard or BTC, cannot work long-term.
- ahnick 6y ago
  If BTC is the only currency and everyone is transacting in BTC, then people are incentivized to hold BTC. Now that everyone is holding BTC, the value of their holdings are increasing alongside everyone else holding BTC. If you go into the store to buy items you will notice that the price in BTC terms will be decreasing b/c more BTC can't be "printed". (Each BTC is worth a lot now and continually increasing, but at a predictable rate) Each person will continue to pay with less and less BTC over time all the way until the lower unit bound, which is a satoshi (0.00000001 BTC), is reached. If we ever reach that point in our lifetime the code will need to be forked to upgrade the protocol to handle further subdivisions.
  - evilos 6y ago
    That is deflation and is intentionally avoided by central banks because you don't want people to hoard their money. Hoarded money sits there and does nothing while money that is in banks can be lent out, invested, and be useful.
    - ahnick 6y ago
      It's only avoided b/c in traditional economies there is no way to subdivide units of a denomination. (e.g. There is no way to split a penny into thousandths) Cryptocurrencies are purely digital and do not have this limitation. The only limitations are self-imposed by the algorithms themselves. If Bitcoins were the dominate and only currency, people would continue to buy food, clothing, luxury goods etc. b/c they need or really want those things and will be willing to trade bitcoins in exchange for those goods. Practically, Bitcoin is unlikely to be the dominate currency allowed in countries to participate in transactions without incurring significant taxes, so likely people will store wealth in Bitcoins(or other cryptocurrencies) and then convert to fiat currencies as they need to make their purchases.

coinward 6y ago

fiat is volatile and loses purchasing power by design. gross!

PragmaticPulp 6y ago

There is no objective measure by which Bitcoin is more stable than USD. The idea that USD is becoming worthless due to recent monetary policy, however ill-advised, is greatly exaggerated. The idea that Bitcoin is the only way to protect oneself against inflation is also greatly exaggerated. Investors have been buying assets and investments for a long time before Bitcoin was invented to avoid inflation. Bitcoin didn't magically change that.

coinward 6y ago
unexpected inflation is just so unexpected. its not that Bitcoin is the only option, its just the best option which is why its emerging as money

sytelus 6y ago

BTC cannot be stable, even eventually. There is no way to increase the BTC supply so when productivity increases, prices of goods (expressed in BTC) will always go up. Assume that BTC is the only currency and world productivity goes up 6% each year, or 0.5% each month. Then when you go in store to buy apple, you will see price gone up by 0.5% than previous month because there is no way to increase money supply. One of the advantage of fiat currency is that you can control the money supply and try to keep prices stable. For BTC, there is no way out either way. The worse case occurs when some economic disaster strikes like subprime mortgage. In that case there is no way to fix the issue and massive uncontrolled depression will trigger and can stay for decades whether you like it or not. In other words, the same things that makes BTC as good store of value, makes it a extremely weak to guarantee stable economy.

andrepd 6y ago
Ahaha, I'm literally listening to a talk by Yanis Varoufakis right now and not 5mins ago he mentioned this as the reason non-fiat money, be it gold standard or BTC, cannot work long-term.
ahnick 6y ago
If BTC is the only currency and everyone is transacting in BTC, then people are incentivized to hold BTC. Now that everyone is holding BTC, the value of their holdings are increasing alongside everyone else holding BTC. If you go into the store to buy items you will notice that the price in BTC terms will be decreasing b/c more BTC can't be "printed". (Each BTC is worth a lot now and continually increasing, but at a predictable rate) Each person will continue to pay with less and less BTC over time all the way until the lower unit bound, which is a satoshi (0.00000001 BTC), is reached. If we ever reach that point in our lifetime the code will need to be forked to upgrade the protocol to handle further subdivisions.
- evilos 6y ago
  That is deflation and is intentionally avoided by central banks because you don't want people to hoard their money. Hoarded money sits there and does nothing while money that is in banks can be lent out, invested, and be useful.
  - ahnick 6y ago
    It's only avoided b/c in traditional economies there is no way to subdivide units of a denomination. (e.g. There is no way to split a penny into thousandths) Cryptocurrencies are purely digital and do not have this limitation. The only limitations are self-imposed by the algorithms themselves. If Bitcoins were the dominate and only currency, people would continue to buy food, clothing, luxury goods etc. b/c they need or really want those things and will be willing to trade bitcoins in exchange for those goods. Practically, Bitcoin is unlikely to be the dominate currency allowed in countries to participate in transactions without incurring significant taxes, so likely people will store wealth in Bitcoins(or other cryptocurrencies) and then convert to fiat currencies as they need to make their purchases.