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If it ever becomes successful, we will marvel that individuals could ever afford a bitcoin. 21 million is a tiny number for a currency when compared to $40 tril

by tsmarsh 14y ago

If it ever becomes successful, we will marvel that individuals could ever afford a bitcoin. 21 million is a tiny number for a currency when compared to $40 trillion in global currency ($6000 per person). ~$1.25 billion spend on Cyber Monday ~$8 billion are traded for oil every day ~$150 billion NYSE daily If bitcoin became the trusted currency for any of these activities what would it be worth? If bitcoin became the global currency we all get 0.003 each, making the upper limit on a bitcoin around $1->2m depending on inflation. Of course wars will be fought before bitcoin becomes a global currency. I'm also not sure that people really want an inflation proof currency. But it is fun to speculate.

nwh 14y ago
Just keep dividing it, that's one of the key designs. Work in mini bitcoin, or micro bitcoin, or even single satoshi. There's nothing saying that you have to use full units.
- hendzen 14y ago
  That doesn't actually solve the underlying problem, which is, why would I spend my bitcoin today when it will be worth more tomorrow? Now, if bitcoin merchants agreed on the expectation that bitcoin will continually rise, it would be rational to price things at a discounted rate. But that is a lot of risk to take considering bitcoin's volatility. In the end I think BTC speculation will do the most to harm its actual economic utility.
Hortinstein 14y ago
as someone who has been mining since mid 2011 on a 450 dollar PC...this would make me very happy. I have already done very well on that investment.
- lignuist 14y ago
  And again: electricity was free?
  - Hortinstein 14y ago
    yes...thank you air force!
sergiosgc 14y ago
This is the fundamental characteristic of bitcoin that puzzles me. Most currencies are inflationary, which in low doses is a good thing: it disincentivizes keeping the money under the mattress, maintaining a healthy flow of currency. Bitcoin is by design deflationary: it's value increases over time. Deflation is destructive to the economy, so if bitcoin is deflationary by design, it can't ever be a primary currency, and thus it's expansion in usage is constrained from the get go. Now, if you assume the market is smart, then there must be some other motive, other than usage, for appreciation. I suspect an artificial bubble.
- snake_plissken 14y ago
  "This is the fundamental characteristic of bitcoin that puzzles me. Most currencies are inflationary, which in low doses is a good thing: it disincentivizes keeping the money under the mattress, maintaining a healthy flow of currency. Bitcoin is by design deflationary: it's value increases over time." Thank you for this. I constantly try to explain this to bitcoin fanatics and they don't get it.
  - Hermel 14y ago
    No one is disputing that Bitcoin is deflationary. What's less clear is how damaging that actually is. If you are looking for a way to preserve value, then being deflationary might even be beneficial. There are plenty of things that are deflationary (i.e. limited in supply), such as gold, stocks of a growing company, or real estate in Manhatten. Does that make these things worthless?
- gyom 14y ago
  To the person who just wants to save for retirement and doesn't want to invest in the rollercoaster stock market, the best thing that money could do is to at least retain its current purchasing power. You can talk about "maintaining a healthy flow of currency", but to some people it's more like "use your dollar coupons before they expire" and they don't like playing that game.
SODaniel 14y ago
Of course, there is absolutely nothing that says this will ever happen.

by tsmarsh 14y ago

nwh 14y ago

Just keep dividing it, that's one of the key designs. Work in mini bitcoin, or micro bitcoin, or even single satoshi. There's nothing saying that you have to use full units.

hendzen 14y ago
That doesn't actually solve the underlying problem, which is, why would I spend my bitcoin today when it will be worth more tomorrow? Now, if bitcoin merchants agreed on the expectation that bitcoin will continually rise, it would be rational to price things at a discounted rate. But that is a lot of risk to take considering bitcoin's volatility. In the end I think BTC speculation will do the most to harm its actual economic utility.

Hortinstein 14y ago

as someone who has been mining since mid 2011 on a 450 dollar PC...this would make me very happy. I have already done very well on that investment.

lignuist 14y ago
And again: electricity was free?
- Hortinstein 14y ago
  yes...thank you air force!

sergiosgc 14y ago

This is the fundamental characteristic of bitcoin that puzzles me. Most currencies are inflationary, which in low doses is a good thing: it disincentivizes keeping the money under the mattress, maintaining a healthy flow of currency. Bitcoin is by design deflationary: it's value increases over time. Deflation is destructive to the economy, so if bitcoin is deflationary by design, it can't ever be a primary currency, and thus it's expansion in usage is constrained from the get go. Now, if you assume the market is smart, then there must be some other motive, other than usage, for appreciation. I suspect an artificial bubble.

snake_plissken 14y ago
"This is the fundamental characteristic of bitcoin that puzzles me. Most currencies are inflationary, which in low doses is a good thing: it disincentivizes keeping the money under the mattress, maintaining a healthy flow of currency. Bitcoin is by design deflationary: it's value increases over time." Thank you for this. I constantly try to explain this to bitcoin fanatics and they don't get it.
- Hermel 14y ago
  No one is disputing that Bitcoin is deflationary. What's less clear is how damaging that actually is. If you are looking for a way to preserve value, then being deflationary might even be beneficial. There are plenty of things that are deflationary (i.e. limited in supply), such as gold, stocks of a growing company, or real estate in Manhatten. Does that make these things worthless?
gyom 14y ago
To the person who just wants to save for retirement and doesn't want to invest in the rollercoaster stock market, the best thing that money could do is to at least retain its current purchasing power. You can talk about "maintaining a healthy flow of currency", but to some people it's more like "use your dollar coupons before they expire" and they don't like playing that game.

SODaniel 14y ago

Of course, there is absolutely nothing that says this will ever happen.