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Every new form of money and trade had the people learning important financial concepts and took many, many years to start to iron out their weaknesses through b
by logicalmonster 4y ago
Every new form of money and trade had the people learning important financial concepts and took many, many years to start to iron out their weaknesses through better technology or best practices.
For instance, when barter and basic trade was used, people had to figure out new methods to do accounting and record-keeping: whether through sticks, tablets, papyrus, etc. It seems simple now, but these basic methods were incredibly huge technological leaps that took a long time, perhaps centuries in some cases, to develop.
When silver/gold were beginning to be used, different lessons had to be learned such as making the edges of coin ridged to prevent certain people from clipping chunks off of coins and taking a small piece of precious metal.
With fiat currencies that are not backed by anything, people had to learn the lessons of inflation. I'd argue that not all humans have even learned this lesson even today. While inflation is particularly glaring today, all people alive today have been systematically robbed of their savings every day, yet this fact is commonly ignored. The amount of value lost by people to inflation is much more glaring than any loss that's happened in the crypto space. In comparison, crypto doesn't have this flaw: there can be no circumstance that changes the fact that Bitcoin only ever has 21 million units and cannot ever be inflated.
Crypto has much smaller problems in comparison to other forms of money. It certainly needs better user interfaces and best practices and a little time for social acclimatization, but the progress from what was a proof of concept in just 13 years has been remarkable.
- dmitrygr 4y ago> there can be no circumstance that changes the fact that Bitcoin only ever has 21 million units and cannot ever be inflated Yes it is deflationary, which is worse for a currency. Why buy anything with a currency whose value will always rise? Better to just hold it. Thus it fails as a currency
- logicalmonster 4y ago> Yes it is deflationary, which is worse for a currency. Cui bono? Who told you that deflationary currencies are inherently bad? Perhaps you're repeating this lesson from central bankers and politicians who would have no ability to manipulate for power if they didn't have the printing press. > Why buy anything with a currency whose value will always rise? Better to just hold it. Thus it fails as a currency IMO, this has always been a dumb criticism of a deflationary setting. People still save their money in an inflationary setting and will also spend during deflation because people still need to eat and live their lives. Certainly people would tend to be more cautious about their spending during deflation: not inherently a bad thing.
- dmitrygr 4y ago> Perhaps you're repeating this lesson from central bankers Yup. That’s what they taught me at the secret anti-buttcoin training camp. (Or it could be that I studied economics, who knows?)
- logicalmonster 4y agoI'm going to ignore the other comment, but I'd be curious about which school of economic thought you learned from. Care to share? It's not hard to see why a Keynesian for instance might be against a deflationary environment.
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- obnauticus 4y agoSmall nit, there is no evidence that barter and trade economies ever existed. When there is a utility for it, humans invent a form of currency nearly immediately.
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