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> nearly as many crazy surges in value. This is hard to explain, like explaining air to animals or water to fish. Deflationary currencies aren't surging in val
by jpadkins 6y ago
> nearly as many crazy surges in value.
This is hard to explain, like explaining air to animals or water to fish. Deflationary currencies aren't surging in value. Fiat currencies are dropping in value.
Your frame of reference is a $ is a fixed unit of measurement, like a cm or gram. This is wrong. $ value is not fixed, and intentionally designed to decrease in value at fixed rate (but in practice does not decrease in value uniformly across all parts of the economy).
What you see as surges in value of Bitcoin are more impacted by decreases in value of $s than anything else. Yes there are changes in demand to hold BTC vs. $, but that is dwarfed by expectations of future changes in the global supply of credit derived $$$s.
Credit based inflationary fiat currencies have a lot of really bad properties. But it's very hard to see those effects, because it surrounds us (like air or water for a fish) and is often confused as the measuring stick of value.
If you are still skeptical, maybe another example: Do you think gold is really 100x more valuable now than it was in 1971? Or do you think a change in ratio of $ : gold available is what causes the 'crazy surge in value'.
- Jtsummers 6y ago> Deflationary currencies aren't surging in value. Fiat currencies are dropping in value. At about this point in 2011, 1 BTC was worth $1. Today 1 BTC is worth about $60k. Are you suggesting that BTC has been mostly consistent in value in that time and that it's the USD which has dropped in value by 60000x in 10 years?
- mszcz 6y agoYour reply sound like a straw man, sorry. Bitcoin is a relatively new asset. What I think he's saying is that some of the price increases are attributable to the loss of value of 1 USD and some to geniune BTC price discovery.
- Jtsummers 6y agoHow is my question a strawman? They wrote this: > What you see as surges in value of Bitcoin are more impacted by decreases in value of $s than anything else. How can that sentence be read as anything other than saying the majority, or at least the largest and primary cause, of the increase in BTC value is the decrease in value of USD (and presumably other fiat currencies based on the rest of their comment)? EDIT: For grins, a quick calculation on what 10% (3-10x higher than the official annual inflation numbers over that period) of inflation per year over 10 years does to the USD: $1 (2011) -> $2.60 (2021). That is, a 2.6x change in value over a decade. BTC has increased in value by 60,000x. Even going with this very high estimate for inflation, we still have about 23,000x change in value to find an explanation for. I'd suggest looking at its deflationary nature.
- jcranmer 6y agoGP's comment (emphasis added): > What you see as surges in value of Bitcoin are more impacted by decreases in value of $s than anything else. Yes there are changes in demand to hold BTC vs. $, but that is dwarfed by expectations of future changes in the global supply of credit derived $$$s. That particular word choice strongly suggests to me that GP sincerely believes that the 10× jump in BTC price is because the USD has (or will shortly) collapsed to well less than a quarter its prior value.
- yellowapple 6y ago> Deflationary currencies aren't surging in value. Fiat currencies are dropping in value. My comment has nothing to do with fiat currencies. Look at the gold/BTC or silver/BTC exchange rates. Or the exchange rates between BTC and the overwhelmingly vast majority of goods and services. Bitcoin's buying power has grown much quicker - by several orders of magnitude - than fiat's has decreased.