3 ms·

as coins gradually transfer to the hands of people who believe they hold long term promise, the market price of 'loose change' available for transfer will rise;

by lutorm 13y ago

as coins gradually transfer to the hands of people who believe they hold long term promise, the market price of 'loose change' available for transfer will rise; that rise in price will actually _increase_ the use of btc as a transfer mechanism because it will attract more people seeing BTC as a store of value This sounds backwards to me. If I think the value will increase, I'm not going to transfer them to you at today's price. So this will decrease the amount of transactions, making it less and less useful as a transfer mechanism. Which is exactly what people say is the problem with deflationary currencies.

DennisP 13y ago
By the same argument, if you think the value of bitcoins will increase, you shouldn't spend your dollars either. You should convert them to bitcoins and hold them. If you do spend dollars, you don't lose anything by converting them to bitcoins just before spending them.
- lmm 13y ago
  So there'll be a deflationary spiral where the value of bitcoins goes up and up, until the only people who have bitcoins are the idle rich who won't sell them at anything less than extortionate prices. Which is not a situation I see as sustainable; at some point the actually productive people making economically valuable things will realize that rather than funding this bunch of freeloaders, they should stop accepting bitcoins as payment.
  - MarkPNeyer 13y ago
    The rates at which bitcoin holders sell them won't be 'exorbitant' because they'll be irrelevant for peopel using them as a transfer mechanism. if you want to send a thousand bucks, and there are many bitcoin holders just sittign on them, the market rate of btc won't matter and you'll be able to quickly sell them whenever you've sent the btc where you wanted to. those 'unproductive' people holding incredibly valuable bitcoins will enable bitcoin to work as a dirt cheap payment processing system.

by lutorm 13y ago

DennisP 13y ago

By the same argument, if you think the value of bitcoins will increase, you shouldn't spend your dollars either. You should convert them to bitcoins and hold them. If you do spend dollars, you don't lose anything by converting them to bitcoins just before spending them.

lmm 13y ago
So there'll be a deflationary spiral where the value of bitcoins goes up and up, until the only people who have bitcoins are the idle rich who won't sell them at anything less than extortionate prices. Which is not a situation I see as sustainable; at some point the actually productive people making economically valuable things will realize that rather than funding this bunch of freeloaders, they should stop accepting bitcoins as payment.
- MarkPNeyer 13y ago
  The rates at which bitcoin holders sell them won't be 'exorbitant' because they'll be irrelevant for peopel using them as a transfer mechanism. if you want to send a thousand bucks, and there are many bitcoin holders just sittign on them, the market rate of btc won't matter and you'll be able to quickly sell them whenever you've sent the btc where you wanted to. those 'unproductive' people holding incredibly valuable bitcoins will enable bitcoin to work as a dirt cheap payment processing system.