3 ms·
That's only people that read the 101 level of how the economy works and don't consider that bitcoin is infinitely divisible practically, unlike gold.
by base698 13y ago
That's only people that read the 101 level of how the economy works and don't consider that bitcoin is infinitely divisible practically, unlike gold.
- reqres 13y agoUnless you're saying that you can split 1 bitcoin into 2 bitcoins, I think your reasoning is flawed. Or looking at it another way, inventing a new denomination like a millicent (= 0.001c) will automatically increase our money supply...
- base698 13y agoSo with our currency if it becomes wildly deflationary with a single penny buying a car--how do you buy a cup of coffee? That is the practical problem with deflation. With bitcoin it can always be made smaller.
- reqres 13y agoGovernments can always invent a new denomination. Mostly its been in the other direction (take off orders of magnitude) But the scenario you're citing isn't the central issue when it comes to deflation. Deflation leads to a negative spiral because it pays off to defer any kind of spending - thereby slamming on the economic brakes. Notable example is Japan in 90s - deflation has been a major factor in its meagre growth then and even into the 2000s. The BoJ's unwillingness to adopt a sufficiently expansionary monetary policy likely exacerbated the problem
- Crito 13y agoI'd say that gold is infinitely divisible in practice, as much or moreso than bitcoin. There is what, a USD dollar or two worth of gold leaf in Goldschläger? You can trivially get down to flakes of gold worth fractions of pennies. The only problem is the cost of division (making leaf is somewhat labor intensive, but not prohibitively so by any stretch). The hard limit is $1e-20, according to wolfram alpha. IIRC bitcoin will only get you down to e-8.
- base698 13y agoBitcoin is only fixed at that now, it can change as needed.