3 ms·

If money is decreasing in value, it gives people a huge incentive to do something with it - buy something or invest. As long as the decrease to the value is sm

If money is decreasing in value, it gives people a huge incentive to do something with it - buy something or invest. As long as the decrease to the value is small (1-3%) and predictable, this is a good thing.

tptacek 15y ago
Since deflation is an obvious tax on investment and purchasing, arguments that increases in the value of a currency are "obviously" a good thing serve as a sort of litmus test for why people are interested in things like Bitcoin. The subtextual motivation for Bitcoin advocacy has always been "it's a speculative asset and I hold a position in it". Everything else is just rhetorical cover. The unfortunate reality is that even by reasoning through Bitcoin's programmed-in deflation, we're dignifying Bitcoin. Bitcoin itself is a sham. The original paper may have been a good-faith contribution to the state of the art in cryptocurrencies, but the "economy" is a trap; a realistic-looking distributed transaction clearing system built on a deliberately volatile wholly synthetic "asset" that exists for the purpose of creating pump-and-dump scams.
- JoachimSchipper 15y ago
  I wouldn't be so sure that the (original) Bitcoin people are running a pump-and-dump scam - there is very little evidence either way. And there are plenty of people who genuinely seem to believe that Twitter causes and/or wins revolutions: love of technology, libertarianism and something we'll call optimism do occur together, and cypherpunks are not the least vulnerable.
  - tptacek 15y ago
    To be clear: I'm not saying the original design was a scam. Only its realization as a real system people can interact with and spend money on. This whole system is morally no different than Zynga tomorrow setting up a system to trade options on Farmville tomatoes.
    - JoachimSchipper 15y ago
      To be clear: I think that some people really do believe that Bitcoin is going to overthrow the monetary system and free us all from the evil government. I also think that quite a few more people believe that Bitcoin can only go up (designed for deflation, right?) "Bitcoin is a scam" is simply not enough to explain stuff from the Bitcoin bulletin to open source GPU mining software - hard work by obviously capable people, and not even remotely the most effective way to become rich. Mind you, I think the "true believers" are incorrect, sometimes naive and occasionally downright stupid; but declaring them "evil" leaves quite a few unanswered questions. [EDIT: Even if the speculators are probably in the majority.] (Also, I wouldn't be surprised if EVE had a foostone contract future market...) EDIT: also, there was nothing wrong with the system design. A bit uninspired, maybe; current research involves zero-knowledge exchanges and the like.
      - Steko 15y ago
        The people that recommended Madoff's fund to their family and friends were probably well intentioned too. And the fund probably wasn't a Ponzi scheme from the beginning either but in the end a scam is a scam.
- Amincd 15y ago
  People trading goods and services cannot be a sham. Your definition of a sham is "something I believe will depreciate".
sesqu 15y ago
I don't really buy this argument. People invest to increase their capital, not to stop it from decreasing. When inflationary pressure is actually tangible, money becomes a hot potato that no one wants, and poof, there goes the economy in a blaze of hyperinflation. Arguing that inflation is good is tantamount to arguing that illiquidity is good. If I were to argue for inflation, I would go with some other angle, like that capital should evaporate after a lifetime.
- SkyMarshal 15y ago
  Inflation != hyperinflation. You're conflating the two in your argument.
  - sesqu 15y ago
    Yes. When the argument for inflation is that rational actors should not want to hold on to money, I will conflate it with the scenario where rational actors should not want to receive money.
- caf 15y ago
  In between "hot potato that nobody wants to hold" and "gold brick that nobody wants to relinquish from their grasp" lies the happy medium that we need.

tptacek 15y ago

Since deflation is an obvious tax on investment and purchasing, arguments that increases in the value of a currency are "obviously" a good thing serve as a sort of litmus test for why people are interested in things like Bitcoin. The subtextual motivation for Bitcoin advocacy has always been "it's a speculative asset and I hold a position in it". Everything else is just rhetorical cover. The unfortunate reality is that even by reasoning through Bitcoin's programmed-in deflation, we're dignifying Bitcoin. Bitcoin itself is a sham. The original paper may have been a good-faith contribution to the state of the art in cryptocurrencies, but the "economy" is a trap; a realistic-looking distributed transaction clearing system built on a deliberately volatile wholly synthetic "asset" that exists for the purpose of creating pump-and-dump scams.

JoachimSchipper 15y ago
I wouldn't be so sure that the (original) Bitcoin people are running a pump-and-dump scam - there is very little evidence either way. And there are plenty of people who genuinely seem to believe that Twitter causes and/or wins revolutions: love of technology, libertarianism and something we'll call optimism do occur together, and cypherpunks are not the least vulnerable.
- tptacek 15y ago
  To be clear: I'm not saying the original design was a scam. Only its realization as a real system people can interact with and spend money on. This whole system is morally no different than Zynga tomorrow setting up a system to trade options on Farmville tomatoes.
  - JoachimSchipper 15y ago
    To be clear: I think that some people really do believe that Bitcoin is going to overthrow the monetary system and free us all from the evil government. I also think that quite a few more people believe that Bitcoin can only go up (designed for deflation, right?) "Bitcoin is a scam" is simply not enough to explain stuff from the Bitcoin bulletin to open source GPU mining software - hard work by obviously capable people, and not even remotely the most effective way to become rich. Mind you, I think the "true believers" are incorrect, sometimes naive and occasionally downright stupid; but declaring them "evil" leaves quite a few unanswered questions. [EDIT: Even if the speculators are probably in the majority.] (Also, I wouldn't be surprised if EVE had a foostone contract future market...) EDIT: also, there was nothing wrong with the system design. A bit uninspired, maybe; current research involves zero-knowledge exchanges and the like.
    - Steko 15y ago
      The people that recommended Madoff's fund to their family and friends were probably well intentioned too. And the fund probably wasn't a Ponzi scheme from the beginning either but in the end a scam is a scam.
Amincd 15y ago
People trading goods and services cannot be a sham. Your definition of a sham is "something I believe will depreciate".

sesqu 15y ago

I don't really buy this argument. People invest to increase their capital, not to stop it from decreasing. When inflationary pressure is actually tangible, money becomes a hot potato that no one wants, and poof, there goes the economy in a blaze of hyperinflation. Arguing that inflation is good is tantamount to arguing that illiquidity is good. If I were to argue for inflation, I would go with some other angle, like that capital should evaporate after a lifetime.

SkyMarshal 15y ago
Inflation != hyperinflation. You're conflating the two in your argument.
- sesqu 15y ago
  Yes. When the argument for inflation is that rational actors should not want to hold on to money, I will conflate it with the scenario where rational actors should not want to receive money.
caf 15y ago
In between "hot potato that nobody wants to hold" and "gold brick that nobody wants to relinquish from their grasp" lies the happy medium that we need.