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The goal to "prevent double-spending" is just a means to fix the money supply. You still have the problem that the value of your money will fluctuate, and the t
by bradleyland 14y ago
The goal to "prevent double-spending" is just a means to fix the money supply. You still have the problem that the value of your money will fluctuate, and the then you end up back at the problem of deflation. If you want the "value" of your currency to remain static, then the amount of currency in circulation must correlate to the size of your economy. New value is created all the time through increased productivity, increased population, and the creation of new markets. If your money supply remains fixed to any of the factors I've listed, you have a deflationary currency.
The "prevention of double-spending" is a means, not an end. You have to ask yourself why you don't want "double-spending".
- erikpukinskis 14y ago> If your money supply remains fixed to any of the factors I've listed, you have a deflationary currency. This seems sensible on it's face, but you're ignoring the effect that speculators have on the market. If consensus is that a commodity will increase 10% year over year then investors will pile on, driving up the price until the expected return is 0%. When the expected return is 0% (like it is for buying a bushel of corn on a random Tuesday and selling it a month later) then your currency is no longer deflating. In other words, expected economic growth will be priced in to Bitcoin. Of course, when the speculators turn out to be wrong about economic growth, you will see the price move. But it won't be deflationary just because the economy is growing.
- bradleyland 14y ago> In other words, expected economic growth will be priced in to Bitcoin. Yeah, that's kind of the point. When economic growth is "priced in to" a currency that is tied to a fixed commodity, it results in value fluctuations of the currency.