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Personally I think that this can be considered on the "bug" side of Bitcoin's finite number coins: if, over time, they are lost, then there's a smaller quantity

Personally I think that this can be considered on the "bug" side of Bitcoin's finite number coins: if, over time, they are lost, then there's a smaller quantity† of currency that is useable to actually do stuff with. This can make the 'rate of deflation' that occurs worse: * https://en.bitcoin.it/wiki/Deflationary_spiral https://en.bitcoin.it/wiki/Deflationary_spiral * https://isps.yale.edu/news/blog/2014/06/the-perils-of-bitcoin-as-currency https://isps.yale.edu/news/blog/2014/06/the-perils-of-bitcoi... * https://crypto.bi/deflationary/ https://crypto.bi/deflationary/ † I am aware of satoshis.

serial_dev 1y ago
When I listen to Bitcoin discussions, one of the advantages people bring up is that there is a limited number of it and you can’t just “print” more. Considering this, while it is true that all this makes deflation worse, I’d assume most bitcoin hodlers would not mind this.
- doublerabbit 1y ago
  What happens when all bitcoin is mined, societal collapse?
  - cjbgkagh 1y ago
    It will go from the near totality of people acquiring their bitcoins through purchase to actual totality.
  - Hamuko 1y ago
    We have other coins too.
- throw0101d 1y ago
  > When I listen to Bitcoin discussions, one of the advantages people bring up is that there is a limited number of it and you can’t just “print” more. Which can limit economic growth. When money was based the amount of gold available, there were long periods of economic stagnation because of liquidity issues: * https://en.wikipedia.org/wiki/Long_Depression https://en.wikipedia.org/wiki/Long_Depression * https://en.wikipedia.org/wiki/Great_Bullion_Famine https://en.wikipedia.org/wiki/Great_Bullion_Famine The stagnation only ended when new sources of shiny rocks were found (California; New World). I find it a dumb idea what whether or not people can get credit to start/expand businesses would be dependent of solving math problems. Yes, credit creation can be "too easy" and become a problem, but making it "too hard" (or physically/mathematically impossible) is even more dumb.
  - logicchains 1y ago
    >there were long periods of economic stagnation During the "long depression" GDP was still growing at 3-4% so it was hardly stagnation.
    - throw0101d 1y ago
      > During the "long depression" GDP was still growing at 3-4% so it was hardly stagnation. I don't know of many things that are viewed positively that have been given a label with "depression" in it. > Figures from Milton Friedman and Anna Schwartz show net national product increased 3 percent per year from 1869 to 1879 and real national product grew at 6.8 percent per year during that time frame.[32] However, since between 1869 and 1879 the population of the United States increased by over 17.5 percent,[33] per capita NNP growth was lower. Following the end of the episode in 1879, the U.S. economy would remain unstable, experiencing recessions for 114 of the 253 months until January 1901.[34] > The dramatic shift in prices mauled nominal wages – in the United States, nominal wages declined by one-quarter during the 1870s,[14] and as much as one-half in some places, such as Pennsylvania.[35] Although real wages had enjoyed robust growth in the aftermath of the American Civil War, increasing by nearly a quarter between 1865 and 1873, they stagnated until the 1880s, posting no real growth, before resuming their robust rate of expansion in the later 1880s.[36] The collapse of cotton prices devastated the already war-ravaged economy of the southern United States.[17] > Thousands of American businesses failed, defaulting on more than a billion dollars of debt.[35] One in four laborers in New York were out of work in the winter of 1873–1874[35] and, nationally, a million became unemployed.[35] * https://en.wikipedia.org/wiki/Long_Depression#United_States https://en.wikipedia.org/wiki/Long_Depression#United_States Seems like a grand-ol time.
      - ghghgfdfgh 1y ago
        If Congress had not demonetized silver in 1873, the metal’s decreasing value would have curbed the deflation of the time. I believe that this was one of the US Government’s greatest mistakes ever, because the reaction to the economic crisis in the 1870’s had a profound effect on the failure of Reconstruction. Friedman wrote a paper on this, called “The Crime of 1873.”
- strogonoff 1y ago
  It is under-appreciated that inflation actually is desirable in a working economy. Look at it this way. If your money (in money form) is worth less tomorrow than today, you are incentivised to spend it, thus fueling economic activity of all sorts (from going out and buying a drink to buying a car, traveling, investing). If your money is worth more tomorrow, then you are incentivised to tighten your belt and not spend for as long as you can. At scale, this negatively affects production, economic mobility, and so forth; the rich get richer and hoard the money. I do not believe any of today’s economies can be healthy and competitive (or even functional) with a deflationary currency.
  - mkleczek 1y ago
    More and more people claim this system of stimulated growth is actually wrong and the root cause for global warming.
    - strogonoff 1y ago
      Sources who claims this, and details as to how? I disagree that it is the cause. The mechanism does not distinguish between “bad economic activity” and “good economic activity”. I.e., the same mechanism applies to positive progress (carbon dioxide sequestration, more expensive technology and techniques reducing environmental impact, etc.), it just requires proper incentive alignment and accounting for bad faith actors via regulation. A deflationary system with limited supply makes kings and ultimately defeats itself, as your money is decreasingly evidence of your effort and work and increasingly evidence of you having held to it for a while. (It is also a quality of the current system, but less so, and it should be even less so, not more so.)
  - amjnsx 1y ago
    This argument falls apart when you consider technology though. And even daily essentials. No one would not buy food and water because they can get more in future. They need it now. The same goes for technology. We all know next year’s iPhone will be better than this year but we still buy them…because we need them now. I’d argue inflation’s incentives are worse - the constant need to invest/spend so that your money doesn’t lose value. It means money flows into anything and everything like zombie companies, over consumption, property. Those on the poorest end are just trapped because as soon as they get any money it starts depreciating.
spankalee 1y ago
This is one reason why Bitcoin isn't a good currency. Deflationary trends give holders a lot of incentive to keep holding and never spend.
- foogazi 1y ago
  You can buy a lot of pizzas with it now
  - cmdli 1y ago
    You can't buy a single pizza with it now. Only by exchanging it for an actual, better currency
    - mindcandy 1y ago
      You can buy a pizza from me with Bitcoin now. I’m not a vendor or even a chef. But, anything is negotiable.
    - owebmaster 1y ago
      you can buy pizza with bitcoin in many places using many methods, exchanging for another currency or not.
- andrewmcwatters 1y ago
  Bitcoin is the world's number one store of value for converting young, impressionable men's wages into thin air and moving those dollars to other people instead. It's a compelling rival to multi-level marketing for women in that both prospects entice low-socioeconomic standing peoples into thinking they are building value instead of consuming it.
- latchkey 1y ago
  It’s a solid store of value. One can borrow against that held BTC, and as it appreciates over time, the loan-to-value ratio improves, without having to do anything. Also avoids capital gains taxes since you're not spending it.
crystaln 1y ago
Deflation is what you want for investment assets. Btc is primarily a value store and commodity like gold, not a currency. Deflation is a good thing when you are parking value.
- mrbombastic 1y ago
  The original bitcoin whitepaper was titled: “a peer to peer electronic cash system”
  - throw0101d 1y ago
    >> Btc is primarily a value store and commodity like gold, not a currency. Deflation is a good thing when you are parking value. > The original bitcoin whitepaper was titled: “a peer to peer electronic cash system” The goalposts, they move.
  - solumunus 1y ago
    The initial intention does not change the practical reality.
- throw0101d 1y ago
  > Deflation is a good thing when you are parking value. And is deflation a good or bad thing for the livelihood and well-being of human beings? How many people in the US has a mortgage or some kind of debt (student, medical)? Inflation makes the burden of debt easier, deflation makes it worse. And the Top (0.)1% already has an easy enough time with parking/generating value. Deflation would only help them more (and make things hard for everyone under them).
  - logicchains 1y ago
    Inflation punishes savers and rewards debtors, i.e. it disincentivises the more economically productive behaviour.
    - thunderfork 1y ago
TheDudeMan 1y ago
Losing some bitcoin is effectively equivalent (over the long term) to distributing it to all other holders (proportionally). So this is fine.
- nosefurhairdo 1y ago
  Which is equivalent to deflation, which parent suggests is harmful to bitcoin's viability. In order to claim that "this is fine" you would need to refute the claim that deflation is bad.
  - hn_throwaway_99 1y ago
    > Which is equivalent to deflation, which parent suggests is harmful to bitcoin's viability. Deflation is built into Bitcoin by design and is one of its most notable features regarding its coin growth schedule. This pros and cons of that approach have been discussed ad infinitum in the crypto community.
    - agumonkey 1y ago
      I wonder when did cypherpunks started to discuss this kind of mechanisms for digital currency. Was it obvious from day one or an idea that came later in the design phases.
      - logicchains 1y ago
        There were early attempts at inflationary cryptocurrencies too but they didn't catch on; all other things being equal, people prefer to hold currencies that gain value over time, not lose value.
        jimkleiber 1y ago
        And the word currency, or current, implies movement, no? So I think it's the issue of thinking people will use it as a currency, not that it is not a valuable asset
oleganza 1y ago
I love how people bring up deflationary spiral as a "peril" while the prerequisite for it is the universal and smashing success of Bitcoin. The only "problem" Bitcoin poses for economies is for governments to fine-tune their local economies via currency production and related controls. In that sense, we should watch how events unfold in Turkey. * among major "regular" economies, Turkey has the highest % of people holding crypto (≈20%). Second only to special zones UAE and Singapore (31%, 24%). * Turkish lira is steadily inflated over the last 30-40 years, well over 10% and recently over 50%. * Turkey does not have mandate for pricing goods in local currency: you can pay in dollars or euros, along the local lira. * When you enter Istanbul airport, Every. Single. Gate. is marked with BTCTurk ad, inside and outside - the major crypto exchange in the country. * Istanbul city market is full of traders who use USDT on Tron. The experiment of social game "Bitcoin" boils down to this: will the people self-organize the functioning economy with monetary freedom, while the gov loses its grip on it; or will the economy collapse without government's regulation and protective management?
- ars 1y ago
  > and smashing success of Bitcoin. It's a success today, we haven't gotten to when they stop issuing any more, and mining is funded by transaction fees. I suspect there are going to be some problems then.
  - latchkey 1y ago
    Like what? As far as I can tell, it will solidify its store of value.
    - throw0101c 1y ago
      > Like what? As far as I can tell, it will solidify its store of value. Which is the bug: > No currency should be able to buy the same basket of goods over very long timespans through hoarding. If you want to retain the purchasing power of your money, it should participate in society via investment. * https://twitter.com/dollarsanddata/status/1592651809750798336 https://twitter.com/dollarsanddata/status/159265180975079833...
amelius 1y ago
> useable to actually do stuff with You mean actually buy stuff? Come on, everybody knows that BTC is used mostly for speculation ...
patrickhogan1 1y ago
Fair point. It seems largely that bitcoin is a store of value rather than a currency that you do stuff with at this point.
Gigachad 1y ago
I don’t think that’s much of an issue for usage. Since a bitcoin can be divided in to 100,000,000 satoshis. There would only need to be a handful of coins left accessible for the system to be usable. Being deflationary I agree is a problem, but not the idea that there aren’t enough usable coins left.
- globular-toast 1y ago
  Everyone always repeats the "deflationary bad" mantra, but I wonder if it really would be. Is the world really going to come crashing down if people only spend on things they need rather than endlessly cycling through shit they don't?
  - kragen 1y ago
    The concern is that capitalism allocates resources to the production of socially valuable goods because corporations can raise money to buy the means of production of those goods before producing them by selling shares in their future profits to investors who are willing to accept some risk of bankruptcy in exchange for those future profits, which result from consumers' rational judgment that the goods are sufficiently valuable to them to be worth buying at a price higher than the cost of goods sold. None of the links in this chain is perfect†, but one of the weaker ones is where investors are willing to accept risk. A guaranteed deflationary currency is a risk-free way to get a return on your investment, so companies have to offer a higher rate of return, narrowing the set of goods that can justify such investment. But the same criticism can be leveled at Treasury bonds and (to many people's minds) real estate, so I'm skeptical of it, and anyway "risk-free" is not a good description of Bitcoin. ______ † Consumers knowingly buy socially harmful goods such as cigarettes, they unintentionally buy worthless goods because producers lie to them, investors are largely speculators driven by herd mentality rather than rational assessors of future returns, corporations cheat investors due to principal–agent problems, and externalized costs and benefits such as pollution aren't measured at all. Still, it's a damn sight better at organizing economic production than the Great Leap Forward, the Southern slave plantations, or the medieval guilds.
    - 1y ago

serial_dev 1y ago

When I listen to Bitcoin discussions, one of the advantages people bring up is that there is a limited number of it and you can’t just “print” more. Considering this, while it is true that all this makes deflation worse, I’d assume most bitcoin hodlers would not mind this.

doublerabbit 1y ago
What happens when all bitcoin is mined, societal collapse?
- cjbgkagh 1y ago
  It will go from the near totality of people acquiring their bitcoins through purchase to actual totality.
- Hamuko 1y ago
  We have other coins too.
throw0101d 1y ago
> When I listen to Bitcoin discussions, one of the advantages people bring up is that there is a limited number of it and you can’t just “print” more. Which can limit economic growth. When money was based the amount of gold available, there were long periods of economic stagnation because of liquidity issues: * https://en.wikipedia.org/wiki/Long_Depression https://en.wikipedia.org/wiki/Long_Depression * https://en.wikipedia.org/wiki/Great_Bullion_Famine https://en.wikipedia.org/wiki/Great_Bullion_Famine The stagnation only ended when new sources of shiny rocks were found (California; New World). I find it a dumb idea what whether or not people can get credit to start/expand businesses would be dependent of solving math problems. Yes, credit creation can be "too easy" and become a problem, but making it "too hard" (or physically/mathematically impossible) is even more dumb.
- logicchains 1y ago
  >there were long periods of economic stagnation During the "long depression" GDP was still growing at 3-4% so it was hardly stagnation.
  - throw0101d 1y ago
    > During the "long depression" GDP was still growing at 3-4% so it was hardly stagnation. I don't know of many things that are viewed positively that have been given a label with "depression" in it. > Figures from Milton Friedman and Anna Schwartz show net national product increased 3 percent per year from 1869 to 1879 and real national product grew at 6.8 percent per year during that time frame.[32] However, since between 1869 and 1879 the population of the United States increased by over 17.5 percent,[33] per capita NNP growth was lower. Following the end of the episode in 1879, the U.S. economy would remain unstable, experiencing recessions for 114 of the 253 months until January 1901.[34] > The dramatic shift in prices mauled nominal wages – in the United States, nominal wages declined by one-quarter during the 1870s,[14] and as much as one-half in some places, such as Pennsylvania.[35] Although real wages had enjoyed robust growth in the aftermath of the American Civil War, increasing by nearly a quarter between 1865 and 1873, they stagnated until the 1880s, posting no real growth, before resuming their robust rate of expansion in the later 1880s.[36] The collapse of cotton prices devastated the already war-ravaged economy of the southern United States.[17] > Thousands of American businesses failed, defaulting on more than a billion dollars of debt.[35] One in four laborers in New York were out of work in the winter of 1873–1874[35] and, nationally, a million became unemployed.[35] * https://en.wikipedia.org/wiki/Long_Depression#United_States https://en.wikipedia.org/wiki/Long_Depression#United_States Seems like a grand-ol time.
    - ghghgfdfgh 1y ago
      If Congress had not demonetized silver in 1873, the metal’s decreasing value would have curbed the deflation of the time. I believe that this was one of the US Government’s greatest mistakes ever, because the reaction to the economic crisis in the 1870’s had a profound effect on the failure of Reconstruction. Friedman wrote a paper on this, called “The Crime of 1873.”
strogonoff 1y ago
It is under-appreciated that inflation actually is desirable in a working economy. Look at it this way. If your money (in money form) is worth less tomorrow than today, you are incentivised to spend it, thus fueling economic activity of all sorts (from going out and buying a drink to buying a car, traveling, investing). If your money is worth more tomorrow, then you are incentivised to tighten your belt and not spend for as long as you can. At scale, this negatively affects production, economic mobility, and so forth; the rich get richer and hoard the money. I do not believe any of today’s economies can be healthy and competitive (or even functional) with a deflationary currency.
- mkleczek 1y ago
  More and more people claim this system of stimulated growth is actually wrong and the root cause for global warming.
  - strogonoff 1y ago
    Sources who claims this, and details as to how? I disagree that it is the cause. The mechanism does not distinguish between “bad economic activity” and “good economic activity”. I.e., the same mechanism applies to positive progress (carbon dioxide sequestration, more expensive technology and techniques reducing environmental impact, etc.), it just requires proper incentive alignment and accounting for bad faith actors via regulation. A deflationary system with limited supply makes kings and ultimately defeats itself, as your money is decreasingly evidence of your effort and work and increasingly evidence of you having held to it for a while. (It is also a quality of the current system, but less so, and it should be even less so, not more so.)
- amjnsx 1y ago
  This argument falls apart when you consider technology though. And even daily essentials. No one would not buy food and water because they can get more in future. They need it now. The same goes for technology. We all know next year’s iPhone will be better than this year but we still buy them…because we need them now. I’d argue inflation’s incentives are worse - the constant need to invest/spend so that your money doesn’t lose value. It means money flows into anything and everything like zombie companies, over consumption, property. Those on the poorest end are just trapped because as soon as they get any money it starts depreciating.

spankalee 1y ago

This is one reason why Bitcoin isn't a good currency. Deflationary trends give holders a lot of incentive to keep holding and never spend.

foogazi 1y ago
You can buy a lot of pizzas with it now
- cmdli 1y ago
  You can't buy a single pizza with it now. Only by exchanging it for an actual, better currency
  - mindcandy 1y ago
    You can buy a pizza from me with Bitcoin now. I’m not a vendor or even a chef. But, anything is negotiable.
  - owebmaster 1y ago
    you can buy pizza with bitcoin in many places using many methods, exchanging for another currency or not.
andrewmcwatters 1y ago
Bitcoin is the world's number one store of value for converting young, impressionable men's wages into thin air and moving those dollars to other people instead. It's a compelling rival to multi-level marketing for women in that both prospects entice low-socioeconomic standing peoples into thinking they are building value instead of consuming it.
latchkey 1y ago
It’s a solid store of value. One can borrow against that held BTC, and as it appreciates over time, the loan-to-value ratio improves, without having to do anything. Also avoids capital gains taxes since you're not spending it.

crystaln 1y ago

Deflation is what you want for investment assets. Btc is primarily a value store and commodity like gold, not a currency. Deflation is a good thing when you are parking value.

mrbombastic 1y ago
The original bitcoin whitepaper was titled: “a peer to peer electronic cash system”
- throw0101d 1y ago
  >> Btc is primarily a value store and commodity like gold, not a currency. Deflation is a good thing when you are parking value. > The original bitcoin whitepaper was titled: “a peer to peer electronic cash system” The goalposts, they move.
- solumunus 1y ago
  The initial intention does not change the practical reality.
throw0101d 1y ago
> Deflation is a good thing when you are parking value. And is deflation a good or bad thing for the livelihood and well-being of human beings? How many people in the US has a mortgage or some kind of debt (student, medical)? Inflation makes the burden of debt easier, deflation makes it worse. And the Top (0.)1% already has an easy enough time with parking/generating value. Deflation would only help them more (and make things hard for everyone under them).
- logicchains 1y ago
  Inflation punishes savers and rewards debtors, i.e. it disincentivises the more economically productive behaviour.
  - thunderfork 1y ago

TheDudeMan 1y ago

Losing some bitcoin is effectively equivalent (over the long term) to distributing it to all other holders (proportionally). So this is fine.

nosefurhairdo 1y ago
Which is equivalent to deflation, which parent suggests is harmful to bitcoin's viability. In order to claim that "this is fine" you would need to refute the claim that deflation is bad.
- hn_throwaway_99 1y ago
  > Which is equivalent to deflation, which parent suggests is harmful to bitcoin's viability. Deflation is built into Bitcoin by design and is one of its most notable features regarding its coin growth schedule. This pros and cons of that approach have been discussed ad infinitum in the crypto community.
  - agumonkey 1y ago
    I wonder when did cypherpunks started to discuss this kind of mechanisms for digital currency. Was it obvious from day one or an idea that came later in the design phases.
    - logicchains 1y ago
      There were early attempts at inflationary cryptocurrencies too but they didn't catch on; all other things being equal, people prefer to hold currencies that gain value over time, not lose value.
      - jimkleiber 1y ago
        And the word currency, or current, implies movement, no? So I think it's the issue of thinking people will use it as a currency, not that it is not a valuable asset

oleganza 1y ago

I love how people bring up deflationary spiral as a "peril" while the prerequisite for it is the universal and smashing success of Bitcoin. The only "problem" Bitcoin poses for economies is for governments to fine-tune their local economies via currency production and related controls. In that sense, we should watch how events unfold in Turkey. * among major "regular" economies, Turkey has the highest % of people holding crypto (≈20%). Second only to special zones UAE and Singapore (31%, 24%). * Turkish lira is steadily inflated over the last 30-40 years, well over 10% and recently over 50%. * Turkey does not have mandate for pricing goods in local currency: you can pay in dollars or euros, along the local lira. * When you enter Istanbul airport, Every. Single. Gate. is marked with BTCTurk ad, inside and outside - the major crypto exchange in the country. * Istanbul city market is full of traders who use USDT on Tron. The experiment of social game "Bitcoin" boils down to this: will the people self-organize the functioning economy with monetary freedom, while the gov loses its grip on it; or will the economy collapse without government's regulation and protective management?

ars 1y ago
> and smashing success of Bitcoin. It's a success today, we haven't gotten to when they stop issuing any more, and mining is funded by transaction fees. I suspect there are going to be some problems then.
- latchkey 1y ago
  Like what? As far as I can tell, it will solidify its store of value.
  - throw0101c 1y ago
    > Like what? As far as I can tell, it will solidify its store of value. Which is the bug: > No currency should be able to buy the same basket of goods over very long timespans through hoarding. If you want to retain the purchasing power of your money, it should participate in society via investment. * https://twitter.com/dollarsanddata/status/1592651809750798336 https://twitter.com/dollarsanddata/status/159265180975079833...

amelius 1y ago

> useable to actually do stuff with You mean actually buy stuff? Come on, everybody knows that BTC is used mostly for speculation ...

patrickhogan1 1y ago

Fair point. It seems largely that bitcoin is a store of value rather than a currency that you do stuff with at this point.

Gigachad 1y ago

I don’t think that’s much of an issue for usage. Since a bitcoin can be divided in to 100,000,000 satoshis. There would only need to be a handful of coins left accessible for the system to be usable. Being deflationary I agree is a problem, but not the idea that there aren’t enough usable coins left.

globular-toast 1y ago
Everyone always repeats the "deflationary bad" mantra, but I wonder if it really would be. Is the world really going to come crashing down if people only spend on things they need rather than endlessly cycling through shit they don't?
- kragen 1y ago
  The concern is that capitalism allocates resources to the production of socially valuable goods because corporations can raise money to buy the means of production of those goods before producing them by selling shares in their future profits to investors who are willing to accept some risk of bankruptcy in exchange for those future profits, which result from consumers' rational judgment that the goods are sufficiently valuable to them to be worth buying at a price higher than the cost of goods sold. None of the links in this chain is perfect†, but one of the weaker ones is where investors are willing to accept risk. A guaranteed deflationary currency is a risk-free way to get a return on your investment, so companies have to offer a higher rate of return, narrowing the set of goods that can justify such investment. But the same criticism can be leveled at Treasury bonds and (to many people's minds) real estate, so I'm skeptical of it, and anyway "risk-free" is not a good description of Bitcoin. ______ † Consumers knowingly buy socially harmful goods such as cigarettes, they unintentionally buy worthless goods because producers lie to them, investors are largely speculators driven by herd mentality rather than rational assessors of future returns, corporations cheat investors due to principal–agent problems, and externalized costs and benefits such as pollution aren't measured at all. Still, it's a damn sight better at organizing economic production than the Great Leap Forward, the Southern slave plantations, or the medieval guilds.
  - 1y ago