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I mean this is not unprecedented (tying the economy to gold caused the great depression). A surprisingly large amount of people, even sometimes otherwise smart

I mean this is not unprecedented (tying the economy to gold caused the great depression). A surprisingly large amount of people, even sometimes otherwise smart ones, can't seem to wrap their head around the fact that having a widespread deflationary token can destabilize the whole economy. Their blindness to this fact will be amplified if they own a lot of such tokens and stand to lose in the short term if the deflationary cycle is broken. Plus there is a prisoner's dilemma of standing to lose more if you sell too early before the peak which causes people to hodl further. What if these people are large corporations and leaders of large financial institutions that have a lot of political influence? The misguided token stabilizers often also seem to be democratically backed by the population that tends to equate tokens losing value to increasing cost of living instead of to market adjustments necessary for people to have jobs. I can see it right now. If cryptocoins become widespread, we will start seeing articles in the press about how they are an integral part of the financial infrastructure now, an evolution of technology and the government should play a role in insuring their stability. If a consensus forms around these dangerous ideas, smarter voices could be drowned.

noxer 6y ago
Well they could become an integral part, so nothing wrong with that. However it would not be bitcoin. The projects who actually work with financial institutions have one thing in common, they dont use PoW. You can read it every day, most powerful people talk bad about bitcoin and some even endorse other cryptos. Deflation on its own is not a problem. Gold is deflationary too that does not cause a depression. It did once but because of the connection between gold and money (fiat). Now days if there would be a gold bubble, the central banks hold most of it and could simply dump the price by selling some. They can buy back with printed money and sell higher to crash it and repeat while unofficially "inform" the right people to short it. As long as the printed fiat still is widely accepted they can fight any deflation bubble from any asset with it. Its the whole point of central banks. They play outside of the rules of all other financial institution with the sole goal to manipulate the market into being somewhat stable. It doesn't really matter that gold would not go to zero and probably even would make a new ATH some yeas later. Busting the bubble is enough of a fix for many many years until the next bubble comes. Its still deflationary but most people dont think in decades and more.

noxer 6y ago

Well they could become an integral part, so nothing wrong with that. However it would not be bitcoin. The projects who actually work with financial institutions have one thing in common, they dont use PoW. You can read it every day, most powerful people talk bad about bitcoin and some even endorse other cryptos. Deflation on its own is not a problem. Gold is deflationary too that does not cause a depression. It did once but because of the connection between gold and money (fiat). Now days if there would be a gold bubble, the central banks hold most of it and could simply dump the price by selling some. They can buy back with printed money and sell higher to crash it and repeat while unofficially "inform" the right people to short it. As long as the printed fiat still is widely accepted they can fight any deflation bubble from any asset with it. Its the whole point of central banks. They play outside of the rules of all other financial institution with the sole goal to manipulate the market into being somewhat stable. It doesn't really matter that gold would not go to zero and probably even would make a new ATH some yeas later. Busting the bubble is enough of a fix for many many years until the next bubble comes. Its still deflationary but most people dont think in decades and more.