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I think this all remains to be seen. Right now the currency is experiencing rapid growth due to network effects. This is an entirely new type of currency in a

I think this all remains to be seen. Right now the currency is experiencing rapid growth due to network effects. This is an entirely new type of currency in an entirely new environment. Until initial growth reaches an equilibrium, we're not going to notice any deflationary issues with the currency. I suspect that once we do reach the top, we'll discover that bitcoin deflates rather predictably and boringly. So much so that it will make the interest rate in your bank's savings account look interesting. You'll still want to invest for the same reasons you want to invest right now--greater returns. I just don't see the doom and gloom here. Maybe if Bitcoin was the primary currency in use. But it's not, and I don't think it's in danger of becoming so anytime soon.

gnaritas 13y ago
> I think this all remains to be seen. What remains to be seen, everything he said it well known economics. > we're not going to notice any deflationary issues with the currency. You're already seeing it. Who wants to spend a currency that keeps increasing in value... that _is deflation_. > I suspect that once we do reach the top, we'll discover that bitcoin deflates rather predictably and boringly. I don't think you understand deflation. > I just don't see the doom and gloom here. Because you don't appear to grok deflation. When the demand for a currency spikes, as bitcoin is now, and the supply is unable to increase to handle that demand, deflation occurs and the price of the currency sky-rockets. Deflation isn't just about the size of the money supply, it's about the size of the demand of the market in relation to the size of the money supply and if a currency can't expand supply to meet that demand then it'll deflate to meet it and that makes it a terrible currency because it punishes spending and rewards saving, exactly the opposite traits of a good medium of exchange.
dragontamer 13y ago
http://blockchain.info/charts/tx-trade-ratio http://blockchain.info/charts/tx-trade-ratio USD <-> BTC Trade Volume is spiking, while BTC Transaction is staying the same. If you believe that BTC is experiencing "rapid growth", can you post some statistics that back your claims? Currently, the charts I'm watching indicate that the only "growth" BTC has right now, is USD <-> BTC exchange volume... which indicates increased speculation.

gnaritas 13y ago

> I think this all remains to be seen. What remains to be seen, everything he said it well known economics. > we're not going to notice any deflationary issues with the currency. You're already seeing it. Who wants to spend a currency that keeps increasing in value... that _is deflation_. > I suspect that once we do reach the top, we'll discover that bitcoin deflates rather predictably and boringly. I don't think you understand deflation. > I just don't see the doom and gloom here. Because you don't appear to grok deflation. When the demand for a currency spikes, as bitcoin is now, and the supply is unable to increase to handle that demand, deflation occurs and the price of the currency sky-rockets. Deflation isn't just about the size of the money supply, it's about the size of the demand of the market in relation to the size of the money supply and if a currency can't expand supply to meet that demand then it'll deflate to meet it and that makes it a terrible currency because it punishes spending and rewards saving, exactly the opposite traits of a good medium of exchange.

dragontamer 13y ago

http://blockchain.info/charts/tx-trade-ratio http://blockchain.info/charts/tx-trade-ratio USD <-> BTC Trade Volume is spiking, while BTC Transaction is staying the same. If you believe that BTC is experiencing "rapid growth", can you post some statistics that back your claims? Currently, the charts I'm watching indicate that the only "growth" BTC has right now, is USD <-> BTC exchange volume... which indicates increased speculation.