3 ms·
I'm not involved with Bitcoin in any way, but I did find the comment "Felix Salmon and many others have pointed out that a currency cannot succeed with a supply
by Intermernet 14y ago
I'm not involved with Bitcoin in any way, but I did find the comment "Felix Salmon and many others have pointed out that a currency cannot succeed with a supply that is fixed, or if it grows too slowly." a little confusing.
Isn't gold a perfect example of a currency that has a fixed supply? Moreover, isn't the value of a currency often based on it's scarcity?
- wmf 14y agoAFAIK many economists now believe that gold caused many depressions in the past and thus is not a good currency. Also, when the value of gold increases it creates an incentive to mine more, but Bitcoin has no such feedback loop.
- Intermernet 14y agoInteresting, I hadn't heard the theory of gold causing depressions (http://en.wikipedia.org/wiki/Causes_of_the_Great_Depression#Gold_standard http://en.wikipedia.org/wiki/Causes_of_the_Great_Depression#...) . It seems that it's still a topic of much debate. The incentive to mine more gold is, IMHO, not a good or sustainable thing. Both gold and Bitcoin are a limited resource, and increasing value is an incentive to mine more of both (look at the sales of ASIC miners). On one hand, gold has practical purposes (medical, electronics, etc.) but on the other hand Bitcoin doesn't involve digging enormous holes in the ground. Maybe there's a real fear that if Bitcoin becomes a viable currency, then gold will be devalued somewhat. The a fore mentioned gold standard may be replaced with a Bitcoin standard. But, I'm no economist, and I have neither gold nor Bitcoins, so I almost certainly have no idea of what I'm talking about.