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I think one of the core assumptions underlying people who adopt Bitcoin is "Inflation is bad". I'm no economist, but I don't think this is always the case. Curr
by seldo 14y ago
I think one of the core assumptions underlying people who adopt Bitcoin is "Inflation is bad". I'm no economist, but I don't think this is always the case. Currencies being able to rise and fall relative to each other allows governments to stimulate the domestic economy by increasing the value of exports, or cool down an overheating economy by doing the reverse.
Meanwhile, there are some other basic features of the currency which seem undesirable to me. In particular, the built-in (and ever-increasing) scarcity of coins means that the value of the currency will always, continuously, rise. That seems great, except that an economy built entirely on Bitcoins would therefore have an economic disincentive to investment -- if you can make 5% return by just sitting on your coins, why would you invest in a new business and create jobs and risk getting less than that?
Bitcoins do seem pretty attractive on an individual level, but at the macro scale they worry me, and I'd love to hear somebody with an economics background chime in on these points.
- mhartl 14y agoVirtually no mainstream economist advocates a perfectly hard currency. This is either an indictment of hard currencies, or an indictment of mainstream economists. You can probably guess how I feel. Unfortunately, discussions on this subject can rapidly become arbitrarily politically incorrect. If you're interested, I'd be happy to send you a link to a very non-mainstream source (but would rather not post it here). My email address is in my profile.
- effn 14y agoBitcoin has experienced more inflation than any other developed country's fiat currency in recent times, with prices rising 700% in just a few months.
- jacoblyles 14y agoYou got that backwards. Inflation is when the price of money falls relative to other goods.