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FTFA: "Now, so far, Bitcoin has not performed well as money. Quick recap: money issued by central banks, fiat money, acts as a ‘store of value’ – it preserves t

FTFA: "Now, so far, Bitcoin has not performed well as money. Quick recap: money issued by central banks, fiat money, acts as a ‘store of value’ – it preserves the spending power of income and wealth, so that you can be confident that a pound, say, will buy about as much in a year’s time as it would today." Heh. The above assumes that world governments will not collude to inflate their currency. Full disclosure: I have no cryptocurrency assets whatsoever, and never have.

thehappypm 5y ago
World governments are panicking because inflation is around 6% when compared to a year of deep pandemic restrictions. 6% is a joke for crypto, both up and down.
- botev 5y ago
  Inflation is probably around 15% lol
- mattwilsonn888 5y ago
  something something price discovery something something emerging market
3np 5y ago
It doesn’t even have to be collusion. There are strong incentives for export nations to devalue their currency. The US has been accusing/criticizing China of doing so, for example. It’s a race to the bottom. The existence of BTC as a deflationary asset is a threat to the power of central banks to keep their economy under control; there is a way out for individuals and businesses.
- lottin 5y ago
  When a country to devalues its currency it sells its production to the rest of the world at a lower price and it buys production from the rest of world at a higher price, compared to before. This is the opposite of a "strong incentive".
  - 3np 5y ago
    Some countries will profit more from that - the reduced global purchasing power is worth it to sell their goods at more competitive prices. This is not a novel idea and is found in literature. Hence the qualifier.
    - lottin 5y ago
      Let me get this straight. If I'm getting paid less per hour, this is good for me because it means I'm selling the stuff I produce at a more competitive price?
      - 3np 5y ago
        Less in global terms, more in local terms. > A weak domestic currency makes a nation's exports more competitive in global markets, and simultaneously makes imports more expensive. Higher export volumes spur economic growth, while pricey imports also have a similar effect because consumers opt for local alternatives to imported products. This improvement in the terms of trade generally translates into a lower current account deficit (or a greater current account surplus), higher employment, and faster GDP growth. The stimulative monetary policies that usually result in a weak currency also have a positive impact on the nation's capital and housing markets, which in turn boosts domestic consumption through the wealth effect. https://www.investopedia.com/articles/investing/090215/3-reasons-why-countries-devalue-their-currency.asp https://www.investopedia.com/articles/investing/090215/3-rea... https://home.treasury.gov/news/press-releases/sm751 https://home.treasury.gov/news/press-releases/sm751
        lottin 5y ago
        > Less in global terms, more in local terms. What does that mean? The fact that a currency depreciation can result in higher GDP, doesn't mean it has to. The Turkish lira has been steadily depreciating against every major currency since 2007 and yet Turkey's real GDP is now below its 2007 level. Its current account balance has not only not improved but it's got worse. Nothing suggests that, as a general rule, countries have "strong incentives" to weaken their currencies.
alfiedotwtf 5y ago
> Heh. The above assumes that world governments will not collude to inflate their currency. ... or default. It will be interesting after the midterms next year if Biden ends up a lame duck President, and Mitch manages to block any further raising of the US debt ceiling. Everyone says it's practically impossible for America to default given its debt denominated in U.S. dollars, but blocking its ability to borrow more so it's unable to pay bond coupons will trigger a default. I wouldn't discount cryptocurrencies as a store of value just yet.
- hypertele-Xii 5y ago
  Cryptocurrencies can default as well, when a glaring vulnerability is discovered and the blockchain forked. It's happened before and it'll happen again.
  - tata71 5y ago
    Fork of which chain?
    - hypertele-Xii 5y ago
      Ethereum, at least?
- landemva 5y ago
  Mitch is part of the club. He may grandstand and then he will ease the spending through.

thehappypm 5y ago

World governments are panicking because inflation is around 6% when compared to a year of deep pandemic restrictions. 6% is a joke for crypto, both up and down.

botev 5y ago
Inflation is probably around 15% lol
mattwilsonn888 5y ago
something something price discovery something something emerging market

3np 5y ago

It doesn’t even have to be collusion. There are strong incentives for export nations to devalue their currency. The US has been accusing/criticizing China of doing so, for example. It’s a race to the bottom. The existence of BTC as a deflationary asset is a threat to the power of central banks to keep their economy under control; there is a way out for individuals and businesses.

lottin 5y ago
When a country to devalues its currency it sells its production to the rest of the world at a lower price and it buys production from the rest of world at a higher price, compared to before. This is the opposite of a "strong incentive".
- 3np 5y ago
  Some countries will profit more from that - the reduced global purchasing power is worth it to sell their goods at more competitive prices. This is not a novel idea and is found in literature. Hence the qualifier.
  - lottin 5y ago
    Let me get this straight. If I'm getting paid less per hour, this is good for me because it means I'm selling the stuff I produce at a more competitive price?
    - 3np 5y ago
      Less in global terms, more in local terms. > A weak domestic currency makes a nation's exports more competitive in global markets, and simultaneously makes imports more expensive. Higher export volumes spur economic growth, while pricey imports also have a similar effect because consumers opt for local alternatives to imported products. This improvement in the terms of trade generally translates into a lower current account deficit (or a greater current account surplus), higher employment, and faster GDP growth. The stimulative monetary policies that usually result in a weak currency also have a positive impact on the nation's capital and housing markets, which in turn boosts domestic consumption through the wealth effect. https://www.investopedia.com/articles/investing/090215/3-reasons-why-countries-devalue-their-currency.asp https://www.investopedia.com/articles/investing/090215/3-rea... https://home.treasury.gov/news/press-releases/sm751 https://home.treasury.gov/news/press-releases/sm751
      - lottin 5y ago
        > Less in global terms, more in local terms. What does that mean? The fact that a currency depreciation can result in higher GDP, doesn't mean it has to. The Turkish lira has been steadily depreciating against every major currency since 2007 and yet Turkey's real GDP is now below its 2007 level. Its current account balance has not only not improved but it's got worse. Nothing suggests that, as a general rule, countries have "strong incentives" to weaken their currencies.

alfiedotwtf 5y ago

> Heh. The above assumes that world governments will not collude to inflate their currency. ... or default. It will be interesting after the midterms next year if Biden ends up a lame duck President, and Mitch manages to block any further raising of the US debt ceiling. Everyone says it's practically impossible for America to default given its debt denominated in U.S. dollars, but blocking its ability to borrow more so it's unable to pay bond coupons will trigger a default. I wouldn't discount cryptocurrencies as a store of value just yet.

hypertele-Xii 5y ago
Cryptocurrencies can default as well, when a glaring vulnerability is discovered and the blockchain forked. It's happened before and it'll happen again.
- tata71 5y ago
  Fork of which chain?
  - hypertele-Xii 5y ago
    Ethereum, at least?
landemva 5y ago
Mitch is part of the club. He may grandstand and then he will ease the spending through.