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Would that not be a bad thing when using it as legal tender? Deflation tends to be disastrous for the economy.
by hagbarth 2y ago
Would that not be a bad thing when using it as legal tender? Deflation tends to be disastrous for the economy.
- tankenmate 2y agoExactly, too many people confuse investment (store of value) part of a currency with fungibility (medium of exchange) and debt (standard of deferred payment). Being good at one or even two of these things doesn't necessarily make it good at all three, good currencies balance all three to a greater or lesser degree.
- motorest 2y ago> Exactly, too many people confuse investment (store of value) (...) The "store of value" trait of money has nothing to do with the investment angle. It literally means value you store. It's the assurance that it retains it's value so to allow you to use it in the future to purchase something just like you could do today.
- almosthere 2y agothat doesnt hold for a deflationary currency
- troupo 2y agoIf the value of your coin only goes up in value, why would you use 1 bitcoin now to buy a pizza slice if you can use it 5-10 years from now to buy a house?
- oneeyedpigeon 2y agoA house in 5-10 years is nice, but it doesn't stop me from starving to death today.
- hagbarth 2y agoI think it was just an analogy. The incentives are to defer purchases, if possible, which lower economic activity overall.
- oneeyedpigeon 2y agoSure, my point was that there are many reasons someone might spend money today that might be better off saved for the future, however much it may increase in value.
- troupo 2y ago> there are many reasons someone might spend money today Yes, because that's the value of money. Bitcoin isn't money. It's a speculative asset precisely because people are hoping its value will only go up.
- oneeyedpigeon 2y agoI'm speaking from experience. I literally spent Bitcoin last week that I would rather have held, because I needed the money.
- robertlagrant 2y ago
- deleted 2y ago[deleted]
- motorest 2y ago> that doesnt hold for a deflationary currency I think crypto proponents in general share this inability to understand the fact that one of the most basic traits of money is stability of it's value, and anything that fails to meet this basic requirement is simply useless as a currency.
- GoblinSlayer 2y agoUseless after IMF bribed you with a huge pile of money.
- npoc 2y agoBitcoiners understand it well. They realise that in order to stabilise in value and become a unit of account, it has to grow close to it's ultimate potential as a store of value first. Which in the case of bitcoin is potentially well over $100T market cap. This is why El Salvador is likely willing to back down in the currency aspect for now and focus onto accumulating and holding bitcoin reserves.
- floydnoel 2y agodeflation is fine for an economy. inflation is disastrous for an economy. the people in charge of the money printers are trying to keep you confused. don’t buy it.
- llamaimperative 2y agoLOL I have $1,000. I believe that tomorrow, my $1,000 will be worth $2,000. Why would I ever spend my money? Hence, economy freezes. This is so plainly obvious to everyone except crypto zealots I literally gasped seeing your comment.
- loophole27 2y agoBecause I need to buy food, clothes, pay rent, and replace my laptop that just died. And I need to do this today or i’ll starve on the street. I could delay buying a new laptop, but that’s a personal preference. I still need one at some point. That’s why I would spend my money, because there are things I need or want.
- llamaimperative 2y agoRight, you'll spend the absolute bare minimum and proactively invest approximately never. This is bad. In fact, you'll only ever invest in highly speculative investments because they're the only things that might possibly justify the opportunity cost of your currency just accruing value. This is bad.
- zhoujianfu 2y agoNot arguing too hard but people do have to spend some money to live regardless… it could be said people are less careful with their money when they feel like it’s losing value, so they spend more and save less. Yes it results in more spending but on what?
- llamaimperative 2y agoYes, it would drive consumption toward the barest minimum to live and investment toward zero. This is bad. > Yet it results in more spending but on what? Well near target inflation rates (which is a positive non-zero number) it results in a mix between consumption and investment. This is good.