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Yeah but imagine if you bought a beer for $4 and then next week the beer was actually worth $8 and the next it was worth $7 and then a few months later the beer
by antihero 5y ago
Yeah but imagine if you bought a beer for $4 and then next week the beer was actually worth $8 and the next it was worth $7 and then a few months later the beer was worth $50. The whole point of fiat is that it is stable and so you aren't fucking yourself by exchanging it for consumables.
- bpodgursky 5y agoThis kind of fiat stability is very challenging for small and poor countries. In fact, El Salvador doesn't _have_ its own currency for this reason -- they switched to the US dollar decades ago! Is it worse to peg your economy to a decentralized cryptocurrency, or a fiat currency controlled by a large powerful near-neighbor who only occasionally even remembers you exist? (and sure as hell will not modify their fiscal policy with the needs of your economy). Having a backup official decentralized currency doesn't seem ridiculous to me. Maybe I'd use Eth or something that can scale better, but the point is the same.
- bb88 5y ago> Is it worse to peg your economy to a decentralized cryptocurrency, or a fiat currency controlled by a large powerful near-neighbor who only occasionally even remembers you exist? A currency needs stability. Speculation needs volatility. Speculation only works when there's a stable currency to dump your value into when the the security your trading is going in the wrong direction.
- atweiden 5y ago> A currency needs stability. The word “currency” is inherently a tautology. How does something become a currency? > Speculation only works when there's a stable currency to dump your value into when the the security is going in the wrong direction. Precious metals long predate government monies. Gold and silver couldn’t have become currency under the definition you’ve presented here.
- chii 5y ago> couldn’t have become currency under the definition you’ve presented here. gold and silver were bad currencies back then, when people had no real alternative. People clipped coins, and debase the currency. People horded them when times were tough, and prevented lending and circulation, causing issues with the economy regarding liquidity. Have a read of https://en.wikipedia.org/wiki/John_Law_(economist)#Economic_theory_and_practice https://en.wikipedia.org/wiki/John_Law_(economist)#Economic_... and educate yourself about the past.
- landemva 5y ago"... only works when there's a stable currency to dump your value into ..." Hence the rise of algorithmic stable coins.
- bb88 5y agoYou mean like... Tether?
- cinntaile 5y agoThere are several alternatives nowadays, you're being dishonest by only mentioning the most controversial one.
- rualca 5y agoFor the sake of argument, what's the absolute best alternative to Tether that you feel could safely be used as an example? Because you quickly resorted to ad hominem attacks even though you failed to provide any alternative or even a single counter example.
- cinntaile 5y agoI don't know what the absolute best alternative is or how you would define the absolute best, I just know that there are several alternatives. The grandparent knows this as well, hence my post. [0] https://coinmarketcap.com/view/stablecoin/ https://coinmarketcap.com/view/stablecoin/
- rualca 5y agoI've asked for your opinion on what you feel is the best counterexample you can put up. It does not seem you're able to point out anything at all. Is that because you are aware that there is actually no good argument to refute OP's point? And thus you resorted to name-calling?
- 5y ago
- Geee 5y agoBitcoin will stabilize in time, when it's big enough to absorb short time supply and demand shocks. It will eventually follow the value of all economic activity through its network. The more economic activity, the less volatility in aggregate. There's a huge cost in "stabilizing" a fiat currency, in terms of debt and inflation.
- acdha 5y agoBitcoin can’t scale to handle anywhere close to that much volume, and the deflationary model makes stability harder to maintain since it discourages routine usage.
- myrryr 5y agoThey are using lightning, which is designed to do so. It if was just bitcoin then yes, they would have serious issues, but it isn't.
- acdha 5y agoMaybe Lightning will scale that well but it hasn’t been demonstrated yet. More importantly, that’ll push a lot of the properties people believe to be true to the banks in all but name most people would actually use.
- BenoitEssiambre 5y agoA deflationary coin cannot stabilize without destabilizing the economy that trades in it. https://benoitessiambre.com/specter.html https://benoitessiambre.com/specter.html
- Geee 5y agoThat argument isn't true. Deflationary currency can destabilize governments, not the economy. Econonomies fail because they're run by incompetent governments, who spend more than they can afford. Bitcoin is not guaranteed to be deflationary. It's deflationary when the economy is growing. It's inflationary when the economy is shrinking. Deflation will slow down economy, and inflation will accelerate economy. It's a stable self-correcting system, which would correct itself to match the average economic growth globally.
- zapdrive 5y agoOh are we back to "Bitcoin is unstable" FUD. I missed the memo. I was still going with the "Bitcoin is bad for environment" FUD. I also loved the "blockchain good but Bitcoin bad" FUD while it lasted, that one was fun.
- FridgeSeal 5y agoExcept that…none of those are incorrect?
- deleted 5y ago[deleted]
- fshbbdssbbgdd 5y agoListing other problems with Bitcoin isn’t a good argument to disprove a proposed problem with Bitcoin.
- slg 5y ago“FUD” implies it is false. Maybe you can argue against some of those, but I have no idea how anyone would argue Bitcoin has a stable value.
- staktrace 5y agoYou argue it is stable by arguing you never need to convert it to fiat. If your economy is running 100% on Bitcoin it doesn't matter what the exchange rate to USD our any other currency is. (Note I'm not actually arguing this is the case in El Salvador, just pointing out that there is a theoretical argument that could be made.)
- nemothekid 5y agoThat is only true if the entire global economy is running 100% on bitcoin. The second you need to trade with another economy (like any nation needs to in order to import/export goods), you are bitten by the same issue. The US is El Salvador's largest trading partner - so Bitcoin's price relative to the USD does matter.
- plankers 5y agoThe beer will always be worth what you paid for it. The money you still have may, however, fluctuate in value.
- syops 5y agoIt isn't true that something is necessarily worth what one pays for it. This assumption provides for a nice way to model economic transactions but it isn't always true. For instance, life saving heart surgery has a definite cost and it is worth far more to the recipient in some cases than what they pay for it. In the other direction I don't think that the cost of government services is worth what I pay for them since I think the U.S. government squanders far too much money on national defense.
- revnode 5y agoWhy does it matter how many dollars the beer is worth? It is worth the same number of bitcoins yesterday, today, and tomorrow. That's the only stability that is relevant.
- gbear605 5y agoThat’s fine as long as my job is willing to pay me in a constant amount of bitcoin and everything else I need to buy can be bought with bitcoin. If my salary is still in dollars, then what I can purchase for a day’s wages will vary hugely.
- derefr 5y agoPresumably, in El Salvador, salaries would be denominated in BTC. That's the only thing that'd make any sense. (And, barring external regulatory force, it's very likely to be what a free job market where employees mostly spend BTC would move to doing.)
- bobthepanda 5y agoImports and exports are not priced in BTC though, in the same way that there aren't really imports or exports priced in gold. Given the massive volatility of BTC it presents a massive opportunity for arbitrage that mostly has downsides for consumers who want stable supplies of goods.
- SamBam 5y agoI don't see why they would be denominated in BTC, given that BTC will be legal tender alongside USD, and USD is a much more stable currency. Making it a legal currency won't even force anyone to accept it. As far as I understand, it will simply mean that the government will accept payments in BTC.
- chii 5y ago> the government will accept payments in BTC. The telling thing would be what the gov't pays in (e.g., for tax returns). Do they pay you back in BTC? or fiat?
- mlcrypto 5y agoEven if you buy with fiat, you're still giving up the opportunity cost of not buying Bitcoin. All of our pizzas in 2011 could have been millions
- freshhawk 5y agoYes, a stable currency also helps people to intelligently buy unstable assets. This is a point for the other team, not yours.
- bufferoverflow 5y agoTell how stable it is to the Venezuelans or the Zimbabweans or the Russians. And Usd isn't doing too well in the last 2 years.
- cbzbc 5y agoPretty sure the USD is more stable than bitcoin over the last two years.
- qeternity 5y agoStable does not mean unchanging. People don’t understand that modest inflation in a currency is actually a good thing because it’s a natural incentive to spend, and velocity of money is a critical aspect of economic growth and health. Moving off of the gold standard launched the world into a period of unprecedented growth. Obviously too much of any good thing is bad, and this applies to inflation as well. But the idea that you’re supposed to hold fiat for long periods of time is absurd and I’m tired of Bitcoin maxis who don’t actually understand money or economics parroting that line. You’re not supposed to hold fiat. You do something productive: you consume with it, you invest in productive assets, or your lend it (to someone who will do one of the two former actions). Bitcoin doesn’t compete with fiat. It competes with every other investment asset.
- imtringued 5y ago>People don’t understand that modest inflation in a currency is actually a good thing because it’s a natural incentive to spend, and velocity of money is a critical aspect of economic growth and health. I looked up hyperinflation in MMOs and honestly the hyperinflation is by design. The fundamental problem is that veterans should not prevent new players from earning money. If the supply was fixed then veterans would acquire the majority of the currency. By letting monsters and NPC vendors print money you are stealing from the rich players robin hood style. It's impossible to solve without just outright taking the money that NPCs printed from wealthy players. I've seen other approaches that just try to limit the supply of ingame currency and tie it to some random cryptocurrency or just plain old dollars and that is such an overengineered solution that doesn't even address the robin hood problem, which isn't a bug, stealing wealth from old players is 100% intentional.