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Yes please Ignore the deflationary spiral that its currently undergoing. It amazes me that people are buying into a system which actively discourages people fro
by dkhenry 14y ago
Yes please Ignore the deflationary spiral that its currently undergoing. It amazes me that people are buying into a system which actively discourages people from using it as a way to exchange good and services.
- amalag 14y agoi don't think it discourages exchange. After all this bitcoin hoopla i saw bitcoinstore which has significant discounts on items over amazon. The next time I have to buy something, I may use them, but I will not keep any money in bitcoins. If there is a P2P economy that processes payments for 1% of a transaction, that could be a very useful thing assuming I trust the merchant.
- gwern 14y agoA deflationary spiral is not a price increase, large or small. It is supposed to be when price increases, large or small, shrinks actual economic activity, causing more price increases, more shrinkage, etc. Has this actually happened? This shouldn't be a hard question to answer if the Bitcoin economy is indeed "currently undergoing" a deflationary spiral.
- jbooth 14y agoIt doesn't seem that it's happening or even can happen, because there really isn't much of a bitcoin economy. The speculation on the currency absolutely dwarfs any usage of it as a currency. Nobody on earth uses it for more than 1% of their purchases. So anyone who wants to use it as a justification for some reactionary ron paul economics is really not observing what's going on. Is claiming you made money on gold as an investment really an argument for gold-backed currency?
- dkhenry 14y agoBecause of the nature of bit coin its impossible to determine how much of the current activity is actual commerce and how much of it is speculative trading. The truth is the system is set up to encourage deflation and there is nothing to prevent it from happening on a large scale. The huge price increase seen over the last few weeks is not because there is an explosion in commerce using BitCoin. Its because people are viewing BitCoin as a investment vehicle and they are hording it. As to your point about there not being an economy, thats exactly the point their currency is worthless not because people won't give you stuff for it, but because in terms of its ability to foster an exchang3e of goods and services it is actively discouraging you from using it ( why buy something today for 1 BTC when next week it will be 0.5 BTC ) The fixed nature of introducing new currency into the market only exasperates this problem as the hard limit on all bit coins that can ever be mined makes it so eventually even that small control over deflation will be non existent and increase the deflation.
- jbooth 14y agoI'm not really disagreeing with you on the facts as regard asset price, I'm saying that calling it 'deflation' is a misnomer because it's being treated much more like an asset than as a currency. I do think it's basically a ponzi scheme. I guess we need a separate term for 'rapidly appreciating value relative to other currencies which makes it prohibitive to create an economy based on this currency in the first place', where deflation occurs to an existing economy based on a currency.
- dkhenry 14y agoMaybe we can call it a Tusser Economy
- dragonwriter 14y ago> This shouldn't be a hard question to answer if the Bitcoin economy is indeed "currently undergoing" a deflationary spiral. It's not happening, because there is no Bitcoin economy. Bitcoin is a trivial factor in the overall economy, not the dominant currency in any particular definable economy.