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One thing I've never understood about crypto is: once the token has completely penetrated society and become the de facto actual currency, doesn't the growth de

One thing I've never understood about crypto is: once the token has completely penetrated society and become the de facto actual currency, doesn't the growth decay? At that point, what's the value in holding that token vs redirecting liquidity to a new token? A common argument I hear from crypto folks is that government-backed currencies are susceptible to hyperinflation, as if cryptocurrencies aren't. But I don't see how this is the case. Once the growth stops, what is stopping everyone from pulling out?

Karunamon 5y ago
They aren't vulnerable in the same way, at least. With nearly every cryptocurrency (with exceptions like Dogecoin), new units of currency enter circulation in a predictable and ultimately, limited way. Vitalik can't conjure a million ethereum out of thin air tomorrow, but any government can spend a ton of money and attempt to cover their costs with newly printed currency. Basically, you're trusting the market to not debase your currency instead of a single issuer.
kevin_nisbet 5y ago
> One thing I've never understood about crypto is: once the token has completely penetrated society and become the de facto actual currency, doesn't the growth decay? At that point, what's the value in holding that token vs redirecting liquidity to a new token? I thought that was sort of the point, that crypto wasn't really meant to be an investment class, but more of a stable store of value like a currency. The mix-in at present is it's not a de-facto currency, so the price is highly volatile due to people treating it as an investment, speculating, gambling, etc. And then the conflict to be wary of, or the question always in the back of my mind when looking at the promoters, is there own investments do better when they sell others on the same investment.
mattwilsonn888 5y ago
> A common argument I hear from crypto folks is that government-backed currencies are susceptible to hyperinflation, as if cryptocurrencies aren't. Sufficiently large, they are not. What made you think they were? Assuming you have a de facto currency which is non-inflationary, the value in holding it rather than redirecting liquidity to another asset class is that holding it is the least risky option. The reason money was directed in to the non-inflationary asset in the first place was that the de facto currency was actively devaluing itself through inflation. The larger concerns of a currency which cannot inflate are the economic problems which can come along with such stiffness - keyword: "deflationary crash."

Karunamon 5y ago

They aren't vulnerable in the same way, at least. With nearly every cryptocurrency (with exceptions like Dogecoin), new units of currency enter circulation in a predictable and ultimately, limited way. Vitalik can't conjure a million ethereum out of thin air tomorrow, but any government can spend a ton of money and attempt to cover their costs with newly printed currency. Basically, you're trusting the market to not debase your currency instead of a single issuer.

kevin_nisbet 5y ago

> One thing I've never understood about crypto is: once the token has completely penetrated society and become the de facto actual currency, doesn't the growth decay? At that point, what's the value in holding that token vs redirecting liquidity to a new token? I thought that was sort of the point, that crypto wasn't really meant to be an investment class, but more of a stable store of value like a currency. The mix-in at present is it's not a de-facto currency, so the price is highly volatile due to people treating it as an investment, speculating, gambling, etc. And then the conflict to be wary of, or the question always in the back of my mind when looking at the promoters, is there own investments do better when they sell others on the same investment.

mattwilsonn888 5y ago

> A common argument I hear from crypto folks is that government-backed currencies are susceptible to hyperinflation, as if cryptocurrencies aren't. Sufficiently large, they are not. What made you think they were? Assuming you have a de facto currency which is non-inflationary, the value in holding it rather than redirecting liquidity to another asset class is that holding it is the least risky option. The reason money was directed in to the non-inflationary asset in the first place was that the de facto currency was actively devaluing itself through inflation. The larger concerns of a currency which cannot inflate are the economic problems which can come along with such stiffness - keyword: "deflationary crash."