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But won't it also encourage people to be wiser with their money, and not waste them on unimportant stuff? If what you're buying has higher value to you than ho

But won't it also encourage people to be wiser with their money, and not waste them on unimportant stuff? If what you're buying has higher value to you than holding the money, then you'll buy it. Isn't overspending what got us into this financial mess in the first place? And getting into too much debt, whether it's the Government itself or the people. Also the deflation effect should only be this great in the early years of the currency. Once it becomes a solid popular currency (like say the euro or the dollar), and it has reached its maximum of 21 million bitcoins, the deflation should be a lot smaller and insignificant to people who would want to "invest" in keeping bitcoins to themselves, because there won't be an avalanche of people wanting bitcoins anymore, so the value of the currency won't surge so much from that point forward. The currency would become more stable and with a more steady growth as it also becomes affected by the law of big numbers.

andylei 15y ago
>> Isn't overspending what got us into this financial mess in the first place? Nope, it was overborrowing. One of the reasons that the economy is sluggish is that consumers are underspending. >> it has reached its maximum of 21 million bitcoins, the deflation should be a lot smaller That's when deflation in bitcoins will get worse, because while wealth will increase, the amount of currency in circulation will not.
- nextparadigms 15y ago
  Yes, overborrowing, but peopled overborrowed so they can spend more, not to invest.
  - Anechoic 15y ago
    A lot of that overborrowing was to buy homes, a commodity which (according to conevtual wisdom) always increases in value. So yes, a lot of that overborrowing was for investment.
  - lyudmil 15y ago
    People kept spending because there were investments available (housing) which outperformed bank interest rates, 401k's, and pretty much everything else. There was no incentive to save because they were saving merely by owning their homes. This happens when there are bubbles. I don't see how the Bitcoin economy is immune to them, so you wouldn't have actually avoided what happened merely by using a different currency.
onemoreact 15y ago
Let's say the total value of Bitcoin's in the world in 15 years is the same as the total value of Australian dollar's (AUD) in the world. Based on the rate of production it's going to take a massive amount of deflation to get there. That might make Bitcoins a good investment but it also makes them a terrible currency. (~261 billion AUD * 1.1USD/AUD / 21 million bitcoins = 13,600$/bitcoin.) All of which is beside the point, unlike banking transactions each bitcoin computer needs to be connected to the internet so you can't create a truly secure network. If the average American had 10+$ in bitcoins on their computer a significant number of them would get hacked on a regular basis and simply lose all that money. Which means for the average consumer they need to deposit that money into some sort of bank and there is no FDIC for bitcoins so when that bank is hacked all that 'money' goes up in smoke. I think we may end up with a pure digital currency sometime soon but bitcoin’s don’t really work (yet). If you want secure anonymous transactions we already have cash and several digital equivalents based on cash, but if you want stability commodity bubbles demonstrate that finite quantities does prevent bubbles and their associated crashes.
- jarek 15y ago
  I'm not sure I see the value of a pure digital currency, anyway. My dollars are digital when I want them digital (paycheques, moving between accounts, bill payments), and physical when I them physical (ATM withdrawal, quick cash IRL transactions).
  - icebraining 15y ago
    And non-existent when the organization holding them for you (e.g. Paypal) decides to freeze your account.
    - jarek 15y ago
      The organizations holding them for me are chartered banks regulated by the government of my country, if they decide to allow freezing the amount I have larger problems. As it happens I consider the need for a private third-party money transferring organization to be one of the larger failures of North American consumer banking systems, but I digress. It's slowly improving in Canada, I can now do inter-bank digital transfers between my accounts without shelling out $50 for a wire. Maybe in another decade or two we'll get to SEPA level.

andylei 15y ago

>> Isn't overspending what got us into this financial mess in the first place? Nope, it was overborrowing. One of the reasons that the economy is sluggish is that consumers are underspending. >> it has reached its maximum of 21 million bitcoins, the deflation should be a lot smaller That's when deflation in bitcoins will get worse, because while wealth will increase, the amount of currency in circulation will not.

nextparadigms 15y ago
Yes, overborrowing, but peopled overborrowed so they can spend more, not to invest.
- Anechoic 15y ago
  A lot of that overborrowing was to buy homes, a commodity which (according to conevtual wisdom) always increases in value. So yes, a lot of that overborrowing was for investment.
- lyudmil 15y ago
  People kept spending because there were investments available (housing) which outperformed bank interest rates, 401k's, and pretty much everything else. There was no incentive to save because they were saving merely by owning their homes. This happens when there are bubbles. I don't see how the Bitcoin economy is immune to them, so you wouldn't have actually avoided what happened merely by using a different currency.

onemoreact 15y ago

Let's say the total value of Bitcoin's in the world in 15 years is the same as the total value of Australian dollar's (AUD) in the world. Based on the rate of production it's going to take a massive amount of deflation to get there. That might make Bitcoins a good investment but it also makes them a terrible currency. (~261 billion AUD * 1.1USD/AUD / 21 million bitcoins = 13,600$/bitcoin.) All of which is beside the point, unlike banking transactions each bitcoin computer needs to be connected to the internet so you can't create a truly secure network. If the average American had 10+$ in bitcoins on their computer a significant number of them would get hacked on a regular basis and simply lose all that money. Which means for the average consumer they need to deposit that money into some sort of bank and there is no FDIC for bitcoins so when that bank is hacked all that 'money' goes up in smoke. I think we may end up with a pure digital currency sometime soon but bitcoin’s don’t really work (yet). If you want secure anonymous transactions we already have cash and several digital equivalents based on cash, but if you want stability commodity bubbles demonstrate that finite quantities does prevent bubbles and their associated crashes.

jarek 15y ago
I'm not sure I see the value of a pure digital currency, anyway. My dollars are digital when I want them digital (paycheques, moving between accounts, bill payments), and physical when I them physical (ATM withdrawal, quick cash IRL transactions).
- icebraining 15y ago
  And non-existent when the organization holding them for you (e.g. Paypal) decides to freeze your account.
  - jarek 15y ago
    The organizations holding them for me are chartered banks regulated by the government of my country, if they decide to allow freezing the amount I have larger problems. As it happens I consider the need for a private third-party money transferring organization to be one of the larger failures of North American consumer banking systems, but I digress. It's slowly improving in Canada, I can now do inter-bank digital transfers between my accounts without shelling out $50 for a wire. Maybe in another decade or two we'll get to SEPA level.