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I just put a sell order in for a percentage of my bitcoins because I think that there will be a pull back, but with that in mind I have the following response:

I just put a sell order in for a percentage of my bitcoins because I think that there will be a pull back, but with that in mind I have the following response: Some of us don't want the help of a government. The revolutionary thing about Bitcoin is that it is a (nearly) zero trust method of transacting. The value is in the fact that there is no central bank to be afraid of. Most of the wealth my parents have lost in their savings was due to inflation and debt backed asset bubbles. Both of which are symptoms of a debt-prone central banking system. There might be arguments that these central banks stabilize the economy for the betterment of everyone, but that is irrelevant when it comes time to choose a currency. Do you want inflation, meddling, and regulation? Serious question. The uninformed should say "yes" and the informed might want to say "no". As for whether or not people are right about Bitcoin being a bubble, I think that bitcoin has a highger likelihood of 20 year success than Twitter and a lower market capitalization. It's a bubble when the baby boomers get involved with their dumb money. When there are ETFs that get traded on the exchanges that are backed on Bitcoin. Then it can be a bubble. Right now, its just an inelastic supply curve and a couple million dollars.

chad_oliver 13y ago
I agree with the majority of your post, but I'm not convinced that inflation should be included in your list of bad things ("do you want inflation, meddling, and regulation?"). A moderate amount of inflation is a very good thing, and this isn't really even open to debate among economists. Its importance has been empirically and theoretically proven many times. Inflation is important because economics is all about creating incentives. We have property rights because it gives people an incentive to work hard and takes risks. We have patents because they give people an incentive to explain how their invention works. We have a market economy because it means that if a company wants to gain market share, it has to create value for the consumer. In the same way, central banks try to maintain low levels of inflation (~3%) because it encourages people to invest their money in profitable ventures, rather than just leaving it under the mattress. Investment is the way wealth is created, so it should be pretty obvious that deflation is bad for the economy. Notice that I'm talking about the economic health of the country, not the individual citizen. If you're only concerned about immediate short term benefits, you should push for zero taxes, high deflation, and the gold standard. But that's penny wise and pound foolish. You're shooting yourself in the foot. Better by far is to support actions which improve the economy, because a rising tide lifts all boats.
- stretchwithme 13y ago
  Inflation is not essential. If people hide their money under mattresses, all that means is that they aren't competing to buy the available goods. Inputs for other ventures are cheaper. If the government weren't trying to re-inflate the asset bubble with cheap money, ventures that make more sense would be flourishing instead. Resources are not infinite. When someone accepts a piece of paper and just holds on to it instead of immediately consuming what he could buy, the resources are available for other things. And when there are more people deferring their consumption, its cheaper to borrow money/resources and cheaper to grow new industries. Countries don't become rich and powerful by consuming everything as soon as they get it. They do it by growing their industries.
  - chad_oliver 13y ago
    You have a very good point, and I hadn't considered that aspect. However, if people defer their consumption, surely they'll also have less need to spend money, and thus less incentive to perform economically productive activities in order to earn money to spend? I'm sure people will be quite happy in the short term, but over longer periods (decades) there will be much less effort (not necessarily money) invested in economic activity.
    - sliverstorm 13y ago
      Yup, that's basically the problem with deflation. It stagnates the economy, and it is self-reinforcing. Called a deflationary spiral.
      - seanmcdirmid 13y ago
        Deflation is the easiest way to turn a recession into a depression.
  - atmosx 13y ago
    I also believe that a currency must be inflationary for all the good known reasons but every time I think of BTC being inflationary I realize that Satoshi didn't really had a choice. Why on earth you would buy an unknown inflationary currency? I mean, it would NEVER take off, except for illegal markets where use the privacy offered by a crypto-currency. But look where we are now? Silk Road gone (well almost) but BTC unaffected and sky-rocketed. You would never have attracted that capital if you haven't a deflationary currency. Actually, by all means it's an asset.
dlsx 13y ago
Your post is so true. My parents still have all their money tied in to their mortgage because the government said it's good for them. Maybe I don't value US currency, because I don't value my US government which is completely broken from head to toe. But, it isn't just an issue for people in the USA. It's a blessing for people who live in more oppressed region of the world. Look at what happened in Iceland and how the bankers stole from the people. People don't like the idea of their wallet being on someone else's hard drive. And that's exactly how the current system is ran. Your money is in a vault, and you have to go through an even worse time to get it than I do. And I don't pay fees, and so on etc.
- sliverstorm 13y ago
  What do you mean, you don't pay fees? What fairy system are you talking about?

chad_oliver 13y ago

I agree with the majority of your post, but I'm not convinced that inflation should be included in your list of bad things ("do you want inflation, meddling, and regulation?"). A moderate amount of inflation is a very good thing, and this isn't really even open to debate among economists. Its importance has been empirically and theoretically proven many times. Inflation is important because economics is all about creating incentives. We have property rights because it gives people an incentive to work hard and takes risks. We have patents because they give people an incentive to explain how their invention works. We have a market economy because it means that if a company wants to gain market share, it has to create value for the consumer. In the same way, central banks try to maintain low levels of inflation (~3%) because it encourages people to invest their money in profitable ventures, rather than just leaving it under the mattress. Investment is the way wealth is created, so it should be pretty obvious that deflation is bad for the economy. Notice that I'm talking about the economic health of the country, not the individual citizen. If you're only concerned about immediate short term benefits, you should push for zero taxes, high deflation, and the gold standard. But that's penny wise and pound foolish. You're shooting yourself in the foot. Better by far is to support actions which improve the economy, because a rising tide lifts all boats.

stretchwithme 13y ago
Inflation is not essential. If people hide their money under mattresses, all that means is that they aren't competing to buy the available goods. Inputs for other ventures are cheaper. If the government weren't trying to re-inflate the asset bubble with cheap money, ventures that make more sense would be flourishing instead. Resources are not infinite. When someone accepts a piece of paper and just holds on to it instead of immediately consuming what he could buy, the resources are available for other things. And when there are more people deferring their consumption, its cheaper to borrow money/resources and cheaper to grow new industries. Countries don't become rich and powerful by consuming everything as soon as they get it. They do it by growing their industries.
- chad_oliver 13y ago
  You have a very good point, and I hadn't considered that aspect. However, if people defer their consumption, surely they'll also have less need to spend money, and thus less incentive to perform economically productive activities in order to earn money to spend? I'm sure people will be quite happy in the short term, but over longer periods (decades) there will be much less effort (not necessarily money) invested in economic activity.
  - sliverstorm 13y ago
    Yup, that's basically the problem with deflation. It stagnates the economy, and it is self-reinforcing. Called a deflationary spiral.
    - seanmcdirmid 13y ago
      Deflation is the easiest way to turn a recession into a depression.
- atmosx 13y ago
  I also believe that a currency must be inflationary for all the good known reasons but every time I think of BTC being inflationary I realize that Satoshi didn't really had a choice. Why on earth you would buy an unknown inflationary currency? I mean, it would NEVER take off, except for illegal markets where use the privacy offered by a crypto-currency. But look where we are now? Silk Road gone (well almost) but BTC unaffected and sky-rocketed. You would never have attracted that capital if you haven't a deflationary currency. Actually, by all means it's an asset.

dlsx 13y ago

Your post is so true. My parents still have all their money tied in to their mortgage because the government said it's good for them. Maybe I don't value US currency, because I don't value my US government which is completely broken from head to toe. But, it isn't just an issue for people in the USA. It's a blessing for people who live in more oppressed region of the world. Look at what happened in Iceland and how the bankers stole from the people. People don't like the idea of their wallet being on someone else's hard drive. And that's exactly how the current system is ran. Your money is in a vault, and you have to go through an even worse time to get it than I do. And I don't pay fees, and so on etc.

sliverstorm 13y ago
What do you mean, you don't pay fees? What fairy system are you talking about?