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RE: The role of Bitcoin in the future - why inflation matters

in #bitcoin7 years ago

TLDR: Watch this

Wow.. You have a lot of assumptions and fallacies in there. Let's go through it.

While the crypto ecosystem is evolving, crypto is trying to find its place in our current economic system.

I think crypto will reshape the economy significantly, not find a place in it. Crypto gives money, as a commodity, back to the market. The market can choose its money.

Here I want to mainly discuss the consequences that would come from establishing Bitcoin as a replacement for fiat currencies, like Euro, Dollar or Pounds.

See, that's my issue with your view: Why jump to establishing anything? In crypto, the market is king. There are no rules & regulations outside of the code. There is no central authority dictating what ought to be used as money and what not. The consumer has full choice.

Fiat currencies are mainly used to pay for goods and services

I don't know why, but this for me implies that this property is unique to fiat currencies. Why not just say currencies are used for exchange? Idk, maybe nitpicky from me, but this attribute is shared by ALL currencies.

This has proved quite useful as fiat is unversially accepted and we do not have to go back to barter, that is trade goods for goods.

Dishonest. Fiat is "universally accepted" because taxes have to be paid in fiat. This props up the value of the paper. Taxation is theft... but i digress.

Although fiat is subject to inflation, the value of the currencies of developed countries is relatively stable in comparison to many other assets.

Now, come on boy. Say it loud and clear: Fiat is not scarce - which means the value of each unique token is decreasing instead of increasing. And you know who suffers the most from that? The developing countries, the poor, the very people you want to help!

Other issues aside, does this not mean that Bitcoin is potentially the better currency?

Why bring up "other issues" and then never going into what that actually means.

The consequences of adopting Bitcoin as a currency are far reaching.

This will blow your mind... You don't have to pass a law to say "Bitcoin is the new currency for now and all times". The market will decide. Maybe Bitcoin is good for large transactions - if you want to buy a house maybe - but not for small Txs. Nobody has to dictate here - people will just use whatever is most useful to them!

Go free choice!

Let's say you want to make a big purchase like a car, but you do not need it immediately. If the price level is steadily falling, waiting to make the purchase seems like a great idea. After all, what are a couple of months when you can save 20%? Adopting this behaviour on a broad basis will by itself cause prices to decline, because nobody will want to buy at the given price level. Vendors will then decrease prices to try to generate demand, but only confirm expectations about prices falling. Consumers will continue to wait and vendors will continue to cut prices.

I love this part. Do you really think that is what is going to happen? People that want to shop for a car, will never do so and die without one, because they could get a cheaper one? It is the keynsian fallacy of looking at the economy frozen - it never is. It's always in flux.

But yes, you are going to get vastly superior products for a fraction of the cost, if the price of products would be measured by an equity based currency, like bitcoin. Poor people would quickly be lifted out of poverty.

This is why Bitcoin or any other deflationary currency is not desirable from an economic perspective.

Speak for yourself, brother. And let me my choice of currency I want to use. Nope, regulation on that.

Mild inflation reverts said effect.

What does that mean? Mild where does that come from? Leave your value judgements at the door..

The best time to do most purchases is today.

Or as I would say it: "Your money is losing value while you are walking to the store - better purchase as much as you can carry, mindless consumer."
And then they have panel discussions on consumerism.......

I m done.

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Excellent points, weak article. I was hoping to read something new, but all I can see is the old "we need inflation otherwise nobody will buy" argument. The demand-side economists got it backwards...

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