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I'm not sure why anyone would want to use a monetary system that maximizes transaction costs. Yeah sure you personally have an incentive to advertise it, since
by imtringued 3y ago
I'm not sure why anyone would want to use a monetary system that maximizes transaction costs. Yeah sure you personally have an incentive to advertise it, since you are directly benefitting from roping people into paying these transaction costs, but that doesn't make it practical.
By transaction costs I not only mean the fees you pay to the miners by the way. Every time there is deflation, there is an opportunity transaction cost made up by the difference in price between the forward pulled transaction and the change in price due to deflation of the reverse transaction that would happen in the future. (Assuming equilibrium of sales and purchases over a lifetime).
Companies must source inputs ahead of time, so they are spending money first and earning it later. In other words, they must sell low and buy high. Any enterprise must overcome the hurdle rate imposed by deflation induced transaction costs. This is why deflation kills an economy. The easiest way to reduce transaction costs is by not producing anything and that is why the Bitcoin economy has remained small.