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The deflationary aspect is only important for currencies backing an economy - if you just use bitcoin for quick anonymous transactions, say dollar-->bitcoin-->p

The deflationary aspect is only important for currencies backing an economy - if you just use bitcoin for quick anonymous transactions, say dollar-->bitcoin-->purchase, then you don't care what the value is doing over time. It is interesting to consider alternatives though - bitcoin could be the Friendster of crypto-currencies.

pfraze 14y ago
As an anonymizer and common middle currency for different economies, with that process, I can see the value. It could be particularly useful for making online purchases without giving buyer credentials.
dragonwriter 14y ago
> The deflationary aspect is only important for currencies backing an economy - if you just use bitcoin for quick anonymous transactions, say dollar-->bitcoin-->purchase, then you don't care what the value is doing over time. What the value is doing over short periods of time (particularly, volatility and liquidity in BTC markets) will affect the transaction fees that will need to be associated with that kind of transaction in order for anyone not to go broke fulfilling them.
surrealize 14y ago
if you just use bitcoin for quick anonymous transactions, say dollar-->bitcoin-->purchase, then you don't care what the value is doing over time If you expect the value of bitcoins to keep going up, why would you only hold them for short periods of time? You're suggesting that people would wait until the last possible moment to change their dollars into bitcoins. But by doing that, they're losing money if the value of bitcoins is going up relative to dollars. In that case, the best strategy is to switch into bitcoins as early as possible, and hold them as long as possible.
- klochner 14y ago
  You wouldn't hold bitcoin if you're not interested in currency speculation. I'm arguing that despite likely wide swings in the value of bitcoin, it's value as an anonymous transaction currency will prevent it from going extinct. People hoard it, driving the price to $10,000 and driving speculators to tears of joy, still people can make quick transactions in fractional bitcoin. It goes bust and the value dives to $10, yet the people using it for transactions could care less.
  - flyinRyan 14y ago
    If they transfer $500 over to buy some computer hardware parts on newegg but can only get a mouse pad by the time the transaction takes I think they'll care less. BTW, it's "could not care less" as in "I could not possibly care less than I actually do". If you could care less that would mean that you do care. Sorry, personal pet peeve.
    - DanBC 14y ago
      > BTW, it's "could not care less" Oxford recognises "could care less" to mean "couldn't care less". "I couldn't care less" is pretty new, first seen in mid 20th century. "I could care less" is newer, but has been in use since at least 1969. This page has some interesting talk about Yiddish stress patterns. When you think about it you can imagine someone saying, sarcastically, with palms up and arms spread, "I could care less", meaning "As if there's anything in the world I could care less about". (http://www.worldwidewords.org/qa/qa-ico1.htm http://www.worldwidewords.org/qa/qa-ico1.htm)
- polshaw 14y ago
  Because most people are risk averse (and past performance is not an indicator of future results), 'lazy' and dislike complexity. If I were European and wanted to buy some stuff from China later in the year, the rational thing to do (given an expected Euro fall) would be to change to Yuan today. If you take this to it's logical end (extreme) then I would be changing all my money, and become a currency trader. To me, the dual functions of BTC as an asset and a transfer mechanism are almost unconnected, often with opposing interests. I often hear how much BTC would be worth if it were used for X% of trade; it's rubbish, that only applies IF people hold BTC for any significant amount of time, which is at least not a necessary part of the equation.

pfraze 14y ago

As an anonymizer and common middle currency for different economies, with that process, I can see the value. It could be particularly useful for making online purchases without giving buyer credentials.

dragonwriter 14y ago

> The deflationary aspect is only important for currencies backing an economy - if you just use bitcoin for quick anonymous transactions, say dollar-->bitcoin-->purchase, then you don't care what the value is doing over time. What the value is doing over short periods of time (particularly, volatility and liquidity in BTC markets) will affect the transaction fees that will need to be associated with that kind of transaction in order for anyone not to go broke fulfilling them.

surrealize 14y ago

if you just use bitcoin for quick anonymous transactions, say dollar-->bitcoin-->purchase, then you don't care what the value is doing over time If you expect the value of bitcoins to keep going up, why would you only hold them for short periods of time? You're suggesting that people would wait until the last possible moment to change their dollars into bitcoins. But by doing that, they're losing money if the value of bitcoins is going up relative to dollars. In that case, the best strategy is to switch into bitcoins as early as possible, and hold them as long as possible.

klochner 14y ago
You wouldn't hold bitcoin if you're not interested in currency speculation. I'm arguing that despite likely wide swings in the value of bitcoin, it's value as an anonymous transaction currency will prevent it from going extinct. People hoard it, driving the price to $10,000 and driving speculators to tears of joy, still people can make quick transactions in fractional bitcoin. It goes bust and the value dives to $10, yet the people using it for transactions could care less.
- flyinRyan 14y ago
  If they transfer $500 over to buy some computer hardware parts on newegg but can only get a mouse pad by the time the transaction takes I think they'll care less. BTW, it's "could not care less" as in "I could not possibly care less than I actually do". If you could care less that would mean that you do care. Sorry, personal pet peeve.
  - DanBC 14y ago
    > BTW, it's "could not care less" Oxford recognises "could care less" to mean "couldn't care less". "I couldn't care less" is pretty new, first seen in mid 20th century. "I could care less" is newer, but has been in use since at least 1969. This page has some interesting talk about Yiddish stress patterns. When you think about it you can imagine someone saying, sarcastically, with palms up and arms spread, "I could care less", meaning "As if there's anything in the world I could care less about". (http://www.worldwidewords.org/qa/qa-ico1.htm http://www.worldwidewords.org/qa/qa-ico1.htm)
polshaw 14y ago
Because most people are risk averse (and past performance is not an indicator of future results), 'lazy' and dislike complexity. If I were European and wanted to buy some stuff from China later in the year, the rational thing to do (given an expected Euro fall) would be to change to Yuan today. If you take this to it's logical end (extreme) then I would be changing all my money, and become a currency trader. To me, the dual functions of BTC as an asset and a transfer mechanism are almost unconnected, often with opposing interests. I often hear how much BTC would be worth if it were used for X% of trade; it's rubbish, that only applies IF people hold BTC for any significant amount of time, which is at least not a necessary part of the equation.