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(If you didn't read the article, cs702 thinks bitcoin could hit $90k.) I still think you are off. The fractional reserve system warps incentives too much. 1.

(If you didn't read the article, cs702 thinks bitcoin could hit $90k.) I still think you are off. The fractional reserve system warps incentives too much. 1. The world needs more than $600 of float. And most people think they have that. The difference is that its wrapped up in the fractional reserve banking system. 2. Due to inflation uninformed people are bullied into investing in mutual funds, stocks, housing, etc. with their savings. Just the existence of bitcoin as a major worldwide currency could transform the traditional saving model. If a 30 year old puts a days wages into an account and can expect a days wages out when he's 80 years old then he can drastically simplify his retirement. He can avoid speculative bubbles and bad mutual fund managers. 3. National currency reserves are currently done with sovereign debt - with the idea being that if a nation goes bankrupt they'll just inflate their currency anyway and the currency reserve may as well be in bonds. If Bitcoin were to become a major world currency, the reserves could be in actual Bitcoins. All of this to say I still think that there is a 90+% chance that bitcoin will fail, but on that remaining percent, the limit higher than 100 times today. I've done the math a couple ways and I end up with $100k to $10m as my outliers given that bitcoin becomes a world currency.

fat0wl 13y ago
I've wonder about #2 though. We see the downsides of saving in an inflationary system, but a finite currency system... do we really expect that to be stable for 50 years, and if so, based on what precedent? I was surprised to see BOA list "It's finite" as an advantage. It seems like this mentality is all anti-inflation (which seems justifiable) yet the alternative is taking a wildly experimental approach to savings. BTC hasn't proven stability within a month really yet, why trust it for 50 years? And then if you put in that 1 day's wage of Bitcoins, what happens when the market cap for BTC fluctuates? It won't always be in a steady demand, it will depend a bit on how many people are using it, no? I am a doomsdayer also I think that it can only succeed if it always remains the same price or keeps going up, but the belief that this is possible is obviously intellectually malformed.
- onebaddude 13y ago
  >but a finite currency system... do we really expect that to be stable for 50 years No, it's deflationary. And while deflation isn't "evil" in and of itself, it causes the same problems as inflation (in reverse, obviously). For example, if Bitcoin are restricted to 21MM units, as the population of the planet increases, an individual's wages must decrease in Bitcoin terms to maintain their real value. That means that prices for goods will have to drop as well, which leads to terrible menu costs, and hoarding (why buy my car now when it will be cheaper in bitcoin terms next year?) In a predictably deflationary environment, it's always better to spend your money "later".
  - fat0wl 13y ago
    yea i hear ya... i've always been wondering what fraction of current market volatility is due to speculation & how much is just the flaw of the deflationary nature exposing itself too soon
  - cuu508 13y ago
    If in say 100 years human population growth stopped, would it still be deflationary? Surely the population cannot grow infinitely?
  - runeks 13y ago
    > In a predictably deflationary environment, it's always better to spend your money "later". So if I'm saving up in a deflationary currency, it's better for me to wait upgrading my computer until the day before I die, instead of doing it now? The thing with saying something is "always better later" is that it logically means that it never gets done, because there's always a "later" (until there isn't (ie. you die)).
    - onebaddude 13y ago
      >"So if I'm saving up in a deflationary currency, it's better for me to wait upgrading my computer until the day before I die, instead of doing it now?" If you're maximizing your economy, yes.
weichi 13y ago
"If a 30 year old puts a days wages into an account and can expect a days wages out when he's 80 years old then he can drastically simplify his retirement." Your idea here seems to be that bitcoin could help you not only hedge against "inflation", but also against rising economic productivity. I.e., what a saver really wants is some kind of guarantee that at age 80 they will be able to consume the same fraction of economic output that they were able to at age 30. Could you spell out how bitcoin helps solve this problem? (I take it for granted that hedging purely against inflation is actually a solved problem, because you can just invest in short term bonds, which provide excellent hedges against inflation. But of course they don't help at all with rising productivity). Edit: Another - massive! - issue with retirement savings is longevity risk. How can you ensure that you won't run out of savings before you die? Bitcoin won't help you here.
- 3pt14159 13y ago
  Bitcoin solves that problem by being finite. Since scientific advances are cumulative and directly impact worker productivity, it is reasonable to assume that a stable currency that does not inflate will at least preserve purchasing power. Investing in short term bonds is not only not riskless (lots of governments and corporations have either defaulted or written down their debt), but often times do not even match inflation. Saving as a logevity risk: Yes. You don't know how long you will live, we could very well develop medicine that would keep me as a functioning senior until I'm 100 years old. But against all other alternative forms of saving, if bitcoin was a world-currency it would be the safest way to assure purchasing power.
  - noselasd 13y ago
    How big a problem is it that bitcoins are finite ? The minimum unit of a bitcoin today is a satoshi, there can ever be max about 2200000000000000 satoshi. Is 2200000000000000 units of currency going to be enough to run a global economy ?
    - 3pt14159 13y ago
      Finite being no-inflation. There is actually no technical limitation from stopping the subdivision of bitcoins.
onebaddude 13y ago
>"Due to inflation uninformed people are bullied into investing in mutual funds, stocks, housing, etc. with their savings." It's not bullying, it's the foundation of capitalism; that is putting capital to work, not putting it under your mattress. I'm satisfied that Bitcoin (or whatever succeeds it) exists, merely as a check against corrupt government. It's good that the money printers know there's an alternative. But I'm not ready to ditch the current economic paradigm, which has created more wealth for more people in the past 200 years than any point in human history. People are disillusioned if they believe there were significantly more economically stable periods in history. Believe it or not, smart people are actually concerned about, working on, and resolving current issues. It doesn't happen overnight.
- writtles 13y ago
  I think the introduction of bitcoin into the current paradigm would only serve to deepen and strengthen it. A universal currency with no barrier of entry and a slew of other features and benefits can and should be leveraged.
- 3pt14159 13y ago
  No, the foundation of capitalism is private property. Coercing individuals to accept a currency for debt payments and then inflating that currency thereby manipulating individuals to invest in markets that they don't understand is not capitalism.
james1071 13y ago
Why Bitcoin and not any other crypto currency?
ufmace 13y ago
Your #2 would be monumentally awful for the economy. The individual might like it if they can let their money just sit there and hold value, but if everybody can save like this, then there is very little incentive for anybody to ever lend out their money. If nobody wants to lend, then nobody can borrow either. (Technically, the price of lending/borrowing, i.e. interest rates, would skyrocket until lenders were willing to lend, but then almost nobody would be able to afford to borrow anything unless they had something with the potential for monumental returns) If nobody can borrow, then how does anybody start or expand a company? If starting and expanding companies gets massively more difficult, then who will employ that 30 year old in the first place? How would any new product or technology ever get created and distributed?
- gohrt 13y ago
  The Austrian theory is that this problem solves itself: 30 yr olds try to hide their money in "inflation-proof" non-fiat currencies for 50 years, and then when they cash out they get a crash course in Supply and Demand -- all these BTC flooding the market and no one producing anything for sale drives the (nominal, BTC) price of everything up, so those BTC don't actually buy much anymore, and people have to go back work to make things for each other.

fat0wl 13y ago

I've wonder about #2 though. We see the downsides of saving in an inflationary system, but a finite currency system... do we really expect that to be stable for 50 years, and if so, based on what precedent? I was surprised to see BOA list "It's finite" as an advantage. It seems like this mentality is all anti-inflation (which seems justifiable) yet the alternative is taking a wildly experimental approach to savings. BTC hasn't proven stability within a month really yet, why trust it for 50 years? And then if you put in that 1 day's wage of Bitcoins, what happens when the market cap for BTC fluctuates? It won't always be in a steady demand, it will depend a bit on how many people are using it, no? I am a doomsdayer also I think that it can only succeed if it always remains the same price or keeps going up, but the belief that this is possible is obviously intellectually malformed.

onebaddude 13y ago
>but a finite currency system... do we really expect that to be stable for 50 years No, it's deflationary. And while deflation isn't "evil" in and of itself, it causes the same problems as inflation (in reverse, obviously). For example, if Bitcoin are restricted to 21MM units, as the population of the planet increases, an individual's wages must decrease in Bitcoin terms to maintain their real value. That means that prices for goods will have to drop as well, which leads to terrible menu costs, and hoarding (why buy my car now when it will be cheaper in bitcoin terms next year?) In a predictably deflationary environment, it's always better to spend your money "later".
- fat0wl 13y ago
  yea i hear ya... i've always been wondering what fraction of current market volatility is due to speculation & how much is just the flaw of the deflationary nature exposing itself too soon
- cuu508 13y ago
  If in say 100 years human population growth stopped, would it still be deflationary? Surely the population cannot grow infinitely?
- runeks 13y ago
  > In a predictably deflationary environment, it's always better to spend your money "later". So if I'm saving up in a deflationary currency, it's better for me to wait upgrading my computer until the day before I die, instead of doing it now? The thing with saying something is "always better later" is that it logically means that it never gets done, because there's always a "later" (until there isn't (ie. you die)).
  - onebaddude 13y ago
    >"So if I'm saving up in a deflationary currency, it's better for me to wait upgrading my computer until the day before I die, instead of doing it now?" If you're maximizing your economy, yes.

weichi 13y ago

"If a 30 year old puts a days wages into an account and can expect a days wages out when he's 80 years old then he can drastically simplify his retirement." Your idea here seems to be that bitcoin could help you not only hedge against "inflation", but also against rising economic productivity. I.e., what a saver really wants is some kind of guarantee that at age 80 they will be able to consume the same fraction of economic output that they were able to at age 30. Could you spell out how bitcoin helps solve this problem? (I take it for granted that hedging purely against inflation is actually a solved problem, because you can just invest in short term bonds, which provide excellent hedges against inflation. But of course they don't help at all with rising productivity). Edit: Another - massive! - issue with retirement savings is longevity risk. How can you ensure that you won't run out of savings before you die? Bitcoin won't help you here.

3pt14159 13y ago
Bitcoin solves that problem by being finite. Since scientific advances are cumulative and directly impact worker productivity, it is reasonable to assume that a stable currency that does not inflate will at least preserve purchasing power. Investing in short term bonds is not only not riskless (lots of governments and corporations have either defaulted or written down their debt), but often times do not even match inflation. Saving as a logevity risk: Yes. You don't know how long you will live, we could very well develop medicine that would keep me as a functioning senior until I'm 100 years old. But against all other alternative forms of saving, if bitcoin was a world-currency it would be the safest way to assure purchasing power.
- noselasd 13y ago
  How big a problem is it that bitcoins are finite ? The minimum unit of a bitcoin today is a satoshi, there can ever be max about 2200000000000000 satoshi. Is 2200000000000000 units of currency going to be enough to run a global economy ?
  - 3pt14159 13y ago
    Finite being no-inflation. There is actually no technical limitation from stopping the subdivision of bitcoins.

onebaddude 13y ago

>"Due to inflation uninformed people are bullied into investing in mutual funds, stocks, housing, etc. with their savings." It's not bullying, it's the foundation of capitalism; that is putting capital to work, not putting it under your mattress. I'm satisfied that Bitcoin (or whatever succeeds it) exists, merely as a check against corrupt government. It's good that the money printers know there's an alternative. But I'm not ready to ditch the current economic paradigm, which has created more wealth for more people in the past 200 years than any point in human history. People are disillusioned if they believe there were significantly more economically stable periods in history. Believe it or not, smart people are actually concerned about, working on, and resolving current issues. It doesn't happen overnight.

writtles 13y ago
I think the introduction of bitcoin into the current paradigm would only serve to deepen and strengthen it. A universal currency with no barrier of entry and a slew of other features and benefits can and should be leveraged.
3pt14159 13y ago
No, the foundation of capitalism is private property. Coercing individuals to accept a currency for debt payments and then inflating that currency thereby manipulating individuals to invest in markets that they don't understand is not capitalism.

james1071 13y ago

Why Bitcoin and not any other crypto currency?

ufmace 13y ago

Your #2 would be monumentally awful for the economy. The individual might like it if they can let their money just sit there and hold value, but if everybody can save like this, then there is very little incentive for anybody to ever lend out their money. If nobody wants to lend, then nobody can borrow either. (Technically, the price of lending/borrowing, i.e. interest rates, would skyrocket until lenders were willing to lend, but then almost nobody would be able to afford to borrow anything unless they had something with the potential for monumental returns) If nobody can borrow, then how does anybody start or expand a company? If starting and expanding companies gets massively more difficult, then who will employ that 30 year old in the first place? How would any new product or technology ever get created and distributed?

gohrt 13y ago
The Austrian theory is that this problem solves itself: 30 yr olds try to hide their money in "inflation-proof" non-fiat currencies for 50 years, and then when they cash out they get a crash course in Supply and Demand -- all these BTC flooding the market and no one producing anything for sale drives the (nominal, BTC) price of everything up, so those BTC don't actually buy much anymore, and people have to go back work to make things for each other.