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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

by 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.
    - runeks 13y ago
      In that case your original statement was inaccurate. It should have read: > In a predictably deflationary environment, you maximize your economy by spending your money "later". Which, in fact, is better said as: > In a predictably deflationary environment, you maximize your economy by not spending money. And that leads us to the obvious fact that saving up money in order to not spend them is absolutely pointless.
      - bobbydavid 13y ago
        Okay but stop thinking in extremes for a second. Imagine I need a car and I hear there is a 30% off sale in January. Yes, I'll wait. Im considering the lost marginal value to me (keeping my shitty car in December) vs marginal gain (saving 30%). That's what deflation feels like.
        runeks 13y ago
        But as far as I can see, you wouldn't have bought the car without deflation (or a sale, as it were), because you couldn't afford it. So in this case it causes you to spend money that you wouldn't have spent otherwise.
- twobits 13y ago
  "why buy my car now when it will be cheaper in bitcoin terms next year?" Because you want to go on vacation this year?

by fat0wl 13y ago

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.
  - runeks 13y ago
    In that case your original statement was inaccurate. It should have read: > In a predictably deflationary environment, you maximize your economy by spending your money "later". Which, in fact, is better said as: > In a predictably deflationary environment, you maximize your economy by not spending money. And that leads us to the obvious fact that saving up money in order to not spend them is absolutely pointless.
    - bobbydavid 13y ago
      Okay but stop thinking in extremes for a second. Imagine I need a car and I hear there is a 30% off sale in January. Yes, I'll wait. Im considering the lost marginal value to me (keeping my shitty car in December) vs marginal gain (saving 30%). That's what deflation feels like.
      - runeks 13y ago
        But as far as I can see, you wouldn't have bought the car without deflation (or a sale, as it were), because you couldn't afford it. So in this case it causes you to spend money that you wouldn't have spent otherwise.
twobits 13y ago
"why buy my car now when it will be cheaper in bitcoin terms next year?" Because you want to go on vacation this year?