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I never understand the counter-inflation argument...most economists understand inflation is something to be managed, but it is far from proven that target infla

I never understand the counter-inflation argument...most economists understand inflation is something to be managed, but it is far from proven that target inflation is bad. There are many useful economic properties of inflation. Meanwhile, Bitcoin has undergone such massive speculative appreciation that everything around it has deflated in comparison. As a result, bitcoin is spectacularly less useful than it would have been. It is no longer useful as a method of transaction and really only a ledger and store of value. this inflation argument is specious. It just isn't the problem that demanded an unregulated anonymous deflationary currency.

seibelj 6y ago
It has never been proven that deflation is bad - Keynesians claim this is the worst thing in the world, but I still have never had it explained to me coherently way deflation is inherently a bad thing.
- abakker 6y ago
  the Keynesian wisdom was that Inflation is good for borrowers and that deflation is good for lenders. Most governments are managing for borrowers since borrowers tend to be investing and it has been a long-held economic axiom that investment is good. Deflation decreases the value of work you have already done.
  - imtringued 6y ago
    >Deflation decreases the value of work you have already done. Are you sure? Deflation increases the value of work you have already done and decreases the value of work you will do in the future. Simple example: If I immediately convert my paycheck in BTC then I would have earned more BTC in 2013 than in 2021. My work in 2013 would be worth more than the work I did in 2021.
    - seibelj 6y ago
      You have a misunderstanding of "value", "worth", "cost", "price", etc. In our inflationary environment, you would (ideally) be paid more for the same service in the future. This does not mean you are automatically worth more every second that passes - rather, the value of the money you are paid in declines. A loaf of bread is a loaf of bread, but the dollar declines in value continuously. You do not automatically think your skills are "worth more" with every second that passes in an inflationary world, just as your skills aren't "worth less" in a deflationary world by virtue of time passing. In a deflationary environment, you would naturally be paid less over time, rather than paid more. Rather than a default of losing money, you are in default of gaining money. Prices adjust lower, and by saving money you are naturally gaining wealth vs. people with lower time preference who are spending money. But in reality, all of this is psychology. There is an amount of wealth in the world, and this is the sum total of all owned assets. We can use any unit of measurement we like to value this. If today there is $1 million total in existence, and tomorrow we double the money supply and there is $2 million, we aren't all suddenly 2x richer. Just as when the central banks print money, people aren't richer - we are redistributing wealth away from people's savings and towards the receivers of money. Wealth is only truly created when useful and productive enterprises grow.
- uhhhhhhhhhhhhhh 6y ago
  As the universe expands, so too must our money supply.
- whytaka 6y ago
  Because deflation means less jobs and less jobs means less people being able to buy food, and starving people are dangerous. Deflation seems good if you're sitting on wealth. You'd be happy to wait things out just buying the basics and let the economy kind of reset from necessities upwards. But lots of other people are starving by that point.
  - seibelj 6y ago
    > Because deflation means less jobs Source?
    - whytaka 6y ago
      Deflation incentivizes delaying purchases. Less purchases means less revenue. Less revenue means smaller budgets for employed staff.
      - seibelj 6y ago
        That's your opinion - I don't see any source. My opinion is that it doesn't cause less jobs - I think it would eventually cause more sustainable jobs as malinvestment is removed from the economy.
        baq 6y ago
        Deflationary crises were common before the invention of the central bank and fiat currencies. Instead of believing go read some history.
        seibelj 6y ago
        The historical incidents of deflation are insignificant and very few. The incidents of hyperinflation are common, and incidents of high inflation are guaranteed with fiat currencies with very few exceptions.
        imtringued 6y ago
- deleted 6y ago
  [deleted]
- karpierz 6y ago
  If your currency deflates, that means a dollar today is worth less than a dollar tomorrow. When you invest money (via loans or buying equity), you trade currency for tangible assets, like stocks or capital. In order for the investment to make sense, the growth on the asset needs to be larger than the growth of the value of the money, plus risk. So in a deflationary currency, loan interest rates must be higher to be worth it. If loan interest rates are higher, then the cost of doing business increases. If the cost of doing business grows, the price of goods to increases. And when the price of goods increases, this causes the amount of goods sold to drop. This causes the income of the business to drop. Which increases the risk of investment, causing interest rates to go up. This cycle continues until everyone is holding on to their cash, and no one is spending. The way to break the cycle is to have cash start to lose value, or inflate. Then the interest rates drop, and people start to spend their money. Another way to think about it is: Say it costs 1.00$ to make a loaf of bread in 2020. By 2030, there's a robot that can make a loaf of bread for 0.10$ in 2020 dollars. So because society has become more productive in those 10 years, the work you did in 2020 is now worth 0.10$ 2020 dollars. So we can think of a dollar as representing the cost of goods, at the time that you did it. So if you make 1$ worth of bread in 2020, it should be able to buy the same amount of bread in the future. So we inflate the currency 10x, so bread still costs for 1$ in 2030, but now there's 10x the amount of bread to go around, and people make 10x the salary, so for people who are currently making money, bread is 10x cheaper. Now, you still want some inflation on top of this, since you want to push people away from sitting on money and towards putting that money to productive use. But that's the core rationale.
  - jl2718 6y ago
    No. It’s worth $10 because you saved your (non-inflationary) money. And you spent the last 10 years making a bread robot instead of working in the financial sector. And how is ‘investing’ a productive use of capital? In deflationary regime, business is about cash flow. Inflationary regime investments are all speculation, and everybody has to play the game. This Keynesian argument comes from a nihilistic disregard for social structures, the environment, and future generations. Look him up. “In the long run, we’ll all be dead” - Keynes
    - 6y ago
- notahacker 6y ago
  Deflation by definition implies means that stuff will be worth less in future than it is now. This is bad for investors and producers spending money now in the hope of earning more money in future. On the other hand, simply holding onto cash is risk free, and that cash will have increased purchasing power in future (at the expense of the producers forced into offering lower prices to get money circulating again) An economic system which deters investment, production and consumption but rewards inactivity is not a healthy one.
  - seibelj 6y ago
    On the contrary, inflation forces you to buy products and invest in things you don't necessarily need, in order to escape the intentional destruction of your wealth. In a world where we are trying to avoid mindless consumption, inflation encourages that. Deflation doesn't discourage investment and consumption. You still need to eat, have shelter, and pursue happiness. It increases the bar at which you will part with your money, as merely holding it has a high level of return. This is a superior system to me.
    - notahacker 6y ago
      > Deflation doesn't discourage investment and consumption...it increases the bar at which you will part with your money Euphemistically rephrasing something is not a refutation. Inflation does not make investment decisions "mindless", but deflation does make the average risk adjusted return on an investment negative. > It increases the bar at which you will part with your money, as merely holding it has a high level of return. This is a superior system to me. The "high level of return" is at the expense of people who are not freeloading, who are forced to create this return for others by making more stuff for less money. Why is it superior for the monetary system to be designed to reward those who put in no effort and take no risks at the expense of those who do?
      - seibelj 6y ago
        I am philosophically opposed to a system where by intentional design, everyone’s money is debased continuously. It’s weird and immoral. You are forcing everyone to be a mini-hedge fund manager, or hire someone else to be one for them, to avoid the government-decision of destroying your wealth. It’s just stupid. You can have an economy with a single dollar, if it can split far enough. Printing new money isn’t increasing the total amount of wealth in the world. It is redistribution.
- seoaeu 6y ago
  Deflation can be devastating to those in debt. If you take out a loan for a house or a tractor, then subsequently discovering that you have to pay back substantially more than you borrowed (before even factoring in interest!) could be quite a shock. To give a simplified example, if a farmer takes out a $50k loan, then at current prices they might be thinking that can be repaid by selling 10,000 bushels of produce at $5/bushel. However, if there is subsequently 20% deflation, then the price would fall to $4/bushel and the farmer would all of a sudden find they have to sell an additional 2500 bushels to get out of debt. If they can't, they risk losing everything to foreclosure.
  - seibelj 6y ago
    Exactly - in a deflationary world debt would be far less common. There would be much wider and typical use of equity, and innovations around equity to make it as common as debt is today.
- nradov 6y ago
  The fears over deflation are mostly just hand waving without much support from real world data. As a prime example consider computers. How much computing capacity could you purchase for $1000 in 2001 versus today? The deflation in that market has been huge, and yet customers keep buying new computers.
  - imtringued 6y ago
    Actually, the entire problem with the economy of the USA (and EU) is that it suffers massively from deflationary pressures. Trade deficits cause savings gluts which fuel underemployment and cause stocks and other assets to go up. The secondary effects of trade deficits are the primary cause of growing wealth inequality.
    - seibelj 6y ago
      I cannot disagree harder. The primary cause of the entire world’s stagnation is the endless money printing by the world’s central banks, and the lack of currency competition as more countries join currency unions (the EU). The closer you are to the money printer, the more money you get. This is the cause of inequality - we have so much fresh money printed with nowhere productive to go, so it goes to inflate the value of housing, education, medicine, and any good that is widely desirable yet scarce. The rich get richer, the poor poorer.
- imtringued 6y ago
  It's quite simple. Future prices go down which means future business incomes go down which means future wages go down. People who inherited money 100 years ago can just sit on it and do nothing with it and still earn more than you will from hard work. The inverse situation is that you invest your money to beat inflation and that investment creates jobs which then fuel consumption. When you consider that we cannot just produce everything we need for the next 200 years in 1800 it becomes pretty obvious that we must keep working from 1801 to 2020 to get to 2021. We can't just sit and do nothing. After all, what are you going to buy with your paper wealth, if nobody is working on the farms and the population has shrunk?
  - seibelj 6y ago
    You act is if people who inherit money now have to work? They hire wealth managers to protect and grow their capital. There is no need to work. What deflation does is reduce the cost of everything. People who are ambitious and want to better their situation will still work, earning an income. People still require goods and services to survive (and thrive). In a deflationary world you reward savers, who delay their gratification, rather than an inflationary world that rewards debtors, who desire instant gratification. Again, there is nothing inherently useful nor required about inflation. We can live in a world where prices are stable, decreasing, or increasing. I like the one where prices are decreasing.
caeril 6y ago
> it is far from proven that target inflation is bad Target inflation is specifically intended to promote consumption. Consumption, particularly in the form of atoms, not bits, is approximately 90% correlated with greenhouse gas emissions, despite all our efforts to roll out renewables. Setting the "inflation is good" argument alongside an article decrying the climate impact of inflation-resistant currencies is . . . well, it's an interesting take. Unless and until we are manufacturing/growing and transporting consumptive goods via renewable and sustainable means, promoting inflation is most certainly contrary to climate stability.
- abakker 6y ago
  This is valid, but not quite the same. Inflation encourages consumption of Goods. Bitcoin encourages the consumption of goods too. To just maintain bitcoin takes a lot of energy. It is a bigger stretch to blame environmental degradation on the math of inflation than it is to look at the direct environmental costs of actually maintaining the bitcoin network. inflation encourages investment in renewables. the deflationary nature of bitcoin appreciation means owners of bitcoin are going to defer current investment in renewables because the future value of bitcoin is greater than the present value of clean energy.
  - webinvest 6y ago
    Inflation has been encouraging investment in oil and gas companies. Just look at the stock market returns by sector since Jan 2021 and see which one stands out! >.> Investors like oil & gas because has a low enough Price to EPS ratio to feel like an undervalued safe haven and it still pays dividends like nothing else. Don’t forget: every $100 invested in bitcoin is $100 of bitcoin sold. There is always somebody on the sell-side. When they receive the money, they may also do productive (likely technology-based) work with it.
- pydry 6y ago
  >Target inflation is specifically intended to promote consumption. No, it's intended to erode debt. Inflation is effectively a transfer of wealth from creditor to debtor.
atwebb 6y ago
Things brings up a side point I can't quite understand. How does the price of BTC, which is almost infinitely divisible, affect usage? I see comments like "We're early, price can still rise, etc". Outside of a store of value any usage / institutional use for transactions wouldn't matter right? The BTC is a proxy for the money / collateral on the sides. If I buy a hamburger with BTC: If it is settled in BTC then the burger price would adjust often. If it is settled in anything else, I just adjust the sat / slice of BTC I use. Am I missing something? Outside of a store of value.
- dia80 6y ago
  Deflation. The price of the burger in BTC has largely been falling. Why spend your appreciating* bitcoins when they will bu worth more tomorrow. If the price is stable this effect goes away and you might as well spend them. * Who knows if this will continue
  - midasuni 6y ago
    Even if BTC hadn’t had it’s ridiculous boom since October, it’s still deflationary from the simple fact every day there are fewer bitcoins as people lose keys.
- greycol 6y ago
  Because to complete a bitcoin transaction it needs to be accepted on the block chain. That incurs a relatively high flat fee (somewhere between $5-$50 dollars in recent times). It doesn't make sense to pay this fee for small amounts (though is great for large amounts). You can get around this by using exchanges and the equivalent of credit cards where multiple transactions are rolled up into one wallet to wallet transaction. This comes at the expense of volatility or if your bullish it comes at the expense of having to float a growing bitcoin reserve. This is not an option for a lot of businesses, basically you need a 3rd party provider for it to make sense for these businesses and realistically that means they're getting cash value at time of trade and it's the provider that is taking on the volatility risk/reward of waiting to trade there bitcoin.
- imtringued 6y ago

seibelj 6y ago

It has never been proven that deflation is bad - Keynesians claim this is the worst thing in the world, but I still have never had it explained to me coherently way deflation is inherently a bad thing.

abakker 6y ago
the Keynesian wisdom was that Inflation is good for borrowers and that deflation is good for lenders. Most governments are managing for borrowers since borrowers tend to be investing and it has been a long-held economic axiom that investment is good. Deflation decreases the value of work you have already done.
- imtringued 6y ago
  >Deflation decreases the value of work you have already done. Are you sure? Deflation increases the value of work you have already done and decreases the value of work you will do in the future. Simple example: If I immediately convert my paycheck in BTC then I would have earned more BTC in 2013 than in 2021. My work in 2013 would be worth more than the work I did in 2021.
  - seibelj 6y ago
    You have a misunderstanding of "value", "worth", "cost", "price", etc. In our inflationary environment, you would (ideally) be paid more for the same service in the future. This does not mean you are automatically worth more every second that passes - rather, the value of the money you are paid in declines. A loaf of bread is a loaf of bread, but the dollar declines in value continuously. You do not automatically think your skills are "worth more" with every second that passes in an inflationary world, just as your skills aren't "worth less" in a deflationary world by virtue of time passing. In a deflationary environment, you would naturally be paid less over time, rather than paid more. Rather than a default of losing money, you are in default of gaining money. Prices adjust lower, and by saving money you are naturally gaining wealth vs. people with lower time preference who are spending money. But in reality, all of this is psychology. There is an amount of wealth in the world, and this is the sum total of all owned assets. We can use any unit of measurement we like to value this. If today there is $1 million total in existence, and tomorrow we double the money supply and there is $2 million, we aren't all suddenly 2x richer. Just as when the central banks print money, people aren't richer - we are redistributing wealth away from people's savings and towards the receivers of money. Wealth is only truly created when useful and productive enterprises grow.
uhhhhhhhhhhhhhh 6y ago
As the universe expands, so too must our money supply.
whytaka 6y ago
Because deflation means less jobs and less jobs means less people being able to buy food, and starving people are dangerous. Deflation seems good if you're sitting on wealth. You'd be happy to wait things out just buying the basics and let the economy kind of reset from necessities upwards. But lots of other people are starving by that point.
- seibelj 6y ago
  > Because deflation means less jobs Source?
  - whytaka 6y ago
    Deflation incentivizes delaying purchases. Less purchases means less revenue. Less revenue means smaller budgets for employed staff.
    - seibelj 6y ago
      That's your opinion - I don't see any source. My opinion is that it doesn't cause less jobs - I think it would eventually cause more sustainable jobs as malinvestment is removed from the economy.
      - baq 6y ago
        Deflationary crises were common before the invention of the central bank and fiat currencies. Instead of believing go read some history.
        seibelj 6y ago
        The historical incidents of deflation are insignificant and very few. The incidents of hyperinflation are common, and incidents of high inflation are guaranteed with fiat currencies with very few exceptions.
      - imtringued 6y ago
deleted 6y ago
[deleted]
karpierz 6y ago
If your currency deflates, that means a dollar today is worth less than a dollar tomorrow. When you invest money (via loans or buying equity), you trade currency for tangible assets, like stocks or capital. In order for the investment to make sense, the growth on the asset needs to be larger than the growth of the value of the money, plus risk. So in a deflationary currency, loan interest rates must be higher to be worth it. If loan interest rates are higher, then the cost of doing business increases. If the cost of doing business grows, the price of goods to increases. And when the price of goods increases, this causes the amount of goods sold to drop. This causes the income of the business to drop. Which increases the risk of investment, causing interest rates to go up. This cycle continues until everyone is holding on to their cash, and no one is spending. The way to break the cycle is to have cash start to lose value, or inflate. Then the interest rates drop, and people start to spend their money. Another way to think about it is: Say it costs 1.00$ to make a loaf of bread in 2020. By 2030, there's a robot that can make a loaf of bread for 0.10$ in 2020 dollars. So because society has become more productive in those 10 years, the work you did in 2020 is now worth 0.10$ 2020 dollars. So we can think of a dollar as representing the cost of goods, at the time that you did it. So if you make 1$ worth of bread in 2020, it should be able to buy the same amount of bread in the future. So we inflate the currency 10x, so bread still costs for 1$ in 2030, but now there's 10x the amount of bread to go around, and people make 10x the salary, so for people who are currently making money, bread is 10x cheaper. Now, you still want some inflation on top of this, since you want to push people away from sitting on money and towards putting that money to productive use. But that's the core rationale.
- jl2718 6y ago
  No. It’s worth $10 because you saved your (non-inflationary) money. And you spent the last 10 years making a bread robot instead of working in the financial sector. And how is ‘investing’ a productive use of capital? In deflationary regime, business is about cash flow. Inflationary regime investments are all speculation, and everybody has to play the game. This Keynesian argument comes from a nihilistic disregard for social structures, the environment, and future generations. Look him up. “In the long run, we’ll all be dead” - Keynes
  - 6y ago
notahacker 6y ago
Deflation by definition implies means that stuff will be worth less in future than it is now. This is bad for investors and producers spending money now in the hope of earning more money in future. On the other hand, simply holding onto cash is risk free, and that cash will have increased purchasing power in future (at the expense of the producers forced into offering lower prices to get money circulating again) An economic system which deters investment, production and consumption but rewards inactivity is not a healthy one.
- seibelj 6y ago
  On the contrary, inflation forces you to buy products and invest in things you don't necessarily need, in order to escape the intentional destruction of your wealth. In a world where we are trying to avoid mindless consumption, inflation encourages that. Deflation doesn't discourage investment and consumption. You still need to eat, have shelter, and pursue happiness. It increases the bar at which you will part with your money, as merely holding it has a high level of return. This is a superior system to me.
  - notahacker 6y ago
    > Deflation doesn't discourage investment and consumption...it increases the bar at which you will part with your money Euphemistically rephrasing something is not a refutation. Inflation does not make investment decisions "mindless", but deflation does make the average risk adjusted return on an investment negative. > It increases the bar at which you will part with your money, as merely holding it has a high level of return. This is a superior system to me. The "high level of return" is at the expense of people who are not freeloading, who are forced to create this return for others by making more stuff for less money. Why is it superior for the monetary system to be designed to reward those who put in no effort and take no risks at the expense of those who do?
    - seibelj 6y ago
      I am philosophically opposed to a system where by intentional design, everyone’s money is debased continuously. It’s weird and immoral. You are forcing everyone to be a mini-hedge fund manager, or hire someone else to be one for them, to avoid the government-decision of destroying your wealth. It’s just stupid. You can have an economy with a single dollar, if it can split far enough. Printing new money isn’t increasing the total amount of wealth in the world. It is redistribution.
seoaeu 6y ago
Deflation can be devastating to those in debt. If you take out a loan for a house or a tractor, then subsequently discovering that you have to pay back substantially more than you borrowed (before even factoring in interest!) could be quite a shock. To give a simplified example, if a farmer takes out a $50k loan, then at current prices they might be thinking that can be repaid by selling 10,000 bushels of produce at $5/bushel. However, if there is subsequently 20% deflation, then the price would fall to $4/bushel and the farmer would all of a sudden find they have to sell an additional 2500 bushels to get out of debt. If they can't, they risk losing everything to foreclosure.
- seibelj 6y ago
  Exactly - in a deflationary world debt would be far less common. There would be much wider and typical use of equity, and innovations around equity to make it as common as debt is today.
nradov 6y ago
The fears over deflation are mostly just hand waving without much support from real world data. As a prime example consider computers. How much computing capacity could you purchase for $1000 in 2001 versus today? The deflation in that market has been huge, and yet customers keep buying new computers.
- imtringued 6y ago
  Actually, the entire problem with the economy of the USA (and EU) is that it suffers massively from deflationary pressures. Trade deficits cause savings gluts which fuel underemployment and cause stocks and other assets to go up. The secondary effects of trade deficits are the primary cause of growing wealth inequality.
  - seibelj 6y ago
    I cannot disagree harder. The primary cause of the entire world’s stagnation is the endless money printing by the world’s central banks, and the lack of currency competition as more countries join currency unions (the EU). The closer you are to the money printer, the more money you get. This is the cause of inequality - we have so much fresh money printed with nowhere productive to go, so it goes to inflate the value of housing, education, medicine, and any good that is widely desirable yet scarce. The rich get richer, the poor poorer.
imtringued 6y ago
It's quite simple. Future prices go down which means future business incomes go down which means future wages go down. People who inherited money 100 years ago can just sit on it and do nothing with it and still earn more than you will from hard work. The inverse situation is that you invest your money to beat inflation and that investment creates jobs which then fuel consumption. When you consider that we cannot just produce everything we need for the next 200 years in 1800 it becomes pretty obvious that we must keep working from 1801 to 2020 to get to 2021. We can't just sit and do nothing. After all, what are you going to buy with your paper wealth, if nobody is working on the farms and the population has shrunk?
- seibelj 6y ago
  You act is if people who inherit money now have to work? They hire wealth managers to protect and grow their capital. There is no need to work. What deflation does is reduce the cost of everything. People who are ambitious and want to better their situation will still work, earning an income. People still require goods and services to survive (and thrive). In a deflationary world you reward savers, who delay their gratification, rather than an inflationary world that rewards debtors, who desire instant gratification. Again, there is nothing inherently useful nor required about inflation. We can live in a world where prices are stable, decreasing, or increasing. I like the one where prices are decreasing.

caeril 6y ago

> it is far from proven that target inflation is bad Target inflation is specifically intended to promote consumption. Consumption, particularly in the form of atoms, not bits, is approximately 90% correlated with greenhouse gas emissions, despite all our efforts to roll out renewables. Setting the "inflation is good" argument alongside an article decrying the climate impact of inflation-resistant currencies is . . . well, it's an interesting take. Unless and until we are manufacturing/growing and transporting consumptive goods via renewable and sustainable means, promoting inflation is most certainly contrary to climate stability.

abakker 6y ago
This is valid, but not quite the same. Inflation encourages consumption of Goods. Bitcoin encourages the consumption of goods too. To just maintain bitcoin takes a lot of energy. It is a bigger stretch to blame environmental degradation on the math of inflation than it is to look at the direct environmental costs of actually maintaining the bitcoin network. inflation encourages investment in renewables. the deflationary nature of bitcoin appreciation means owners of bitcoin are going to defer current investment in renewables because the future value of bitcoin is greater than the present value of clean energy.
- webinvest 6y ago
  Inflation has been encouraging investment in oil and gas companies. Just look at the stock market returns by sector since Jan 2021 and see which one stands out! >.> Investors like oil & gas because has a low enough Price to EPS ratio to feel like an undervalued safe haven and it still pays dividends like nothing else. Don’t forget: every $100 invested in bitcoin is $100 of bitcoin sold. There is always somebody on the sell-side. When they receive the money, they may also do productive (likely technology-based) work with it.
pydry 6y ago
>Target inflation is specifically intended to promote consumption. No, it's intended to erode debt. Inflation is effectively a transfer of wealth from creditor to debtor.

atwebb 6y ago

Things brings up a side point I can't quite understand. How does the price of BTC, which is almost infinitely divisible, affect usage? I see comments like "We're early, price can still rise, etc". Outside of a store of value any usage / institutional use for transactions wouldn't matter right? The BTC is a proxy for the money / collateral on the sides. If I buy a hamburger with BTC: If it is settled in BTC then the burger price would adjust often. If it is settled in anything else, I just adjust the sat / slice of BTC I use. Am I missing something? Outside of a store of value.

dia80 6y ago
Deflation. The price of the burger in BTC has largely been falling. Why spend your appreciating* bitcoins when they will bu worth more tomorrow. If the price is stable this effect goes away and you might as well spend them. * Who knows if this will continue
- midasuni 6y ago
  Even if BTC hadn’t had it’s ridiculous boom since October, it’s still deflationary from the simple fact every day there are fewer bitcoins as people lose keys.
greycol 6y ago
Because to complete a bitcoin transaction it needs to be accepted on the block chain. That incurs a relatively high flat fee (somewhere between $5-$50 dollars in recent times). It doesn't make sense to pay this fee for small amounts (though is great for large amounts). You can get around this by using exchanges and the equivalent of credit cards where multiple transactions are rolled up into one wallet to wallet transaction. This comes at the expense of volatility or if your bullish it comes at the expense of having to float a growing bitcoin reserve. This is not an option for a lot of businesses, basically you need a 3rd party provider for it to make sense for these businesses and realistically that means they're getting cash value at time of trade and it's the provider that is taking on the volatility risk/reward of waiting to trade there bitcoin.
imtringued 6y ago