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Bitcoin's value comes entirely from its utility as a currency, but its deflationary nature would mean people won't be willing to use Bitcoin to buy actual stuff
by yen223 13y ago
Bitcoin's value comes entirely from its utility as a currency, but its deflationary nature would mean people won't be willing to use Bitcoin to buy actual stuff. It'll be interesting to see how this plays out.
I suspect Bitcoin will occupy the same space that gold does now, as just another place to store your money during economic downtimes.
- mattm 13y agoI really think people will have the opposite view about it. Before making a purchase in bitcoin you could think "I could hold this bitcoin and it will be worth ? in the future." or "I paid X for this Bitcoin and now it is worth X+Y so buying this product now for X is a discount of Y"
- atom-morgan 13y ago"...but its deflationary nature would mean people won't be willing to use Bitcoin to buy actual stuff." It's all about time preference. For certain goods people have a very high time preference. For other goods, it's low. Would I forgo dinner simply because I think my Bitcoin will be worth more a week from now? Probably not since I have a high time preference for food. I need it to survive. Just think about goods in technology. They are extremely deflationary. Using the deflationary logic people use to criticize Bitcoin, why would anyone buy an iPhone 5S or Nexus 5 today when they know it's going to be cheaper 6 months from now?
- FellowTraveler 13y agoIf you save your dollars in the bank and earn interest, you end up with more dollars than if you spend them now. Therefore, no one will ever spend their dollars to buy actual stuff.