Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

You don't understand money – and it's a good thing for Bitcoin

beta.sapien.network

Post reply on HN
Print view View original

41–50 of 75 posts

Re: You don't understand money – and it's a good thing for Bitcoin

#41

Post by ivalm »

sedeki wrote: post #37
weego wrote: post #31

Earlier quoted context omitted.

So we've been ravaged by ww3 and our money is useless. How exactly do I still have Internet access and who is running all this infrastructure to allow me to trade crypto with someone? And why are cryptocurrencies, which are also a limited resource that can't be diluted, immune to inflation?

I am pretty sure deflation is the big concern with limited supply, not inflation. For exactly the reason that the supply is limited... There are issues of Bitcoin one could argue about - but inflation is not one of them. Give us a concrete scenario.

While deflation is a concern for the economy as a whole people who hold money generally like deflation. A lot of why people bought cryptos is in hopes of massive deflation (egbitcoin price going up). Also, the promise of cryptos is essentially deflationary since productivity (and total world wealth) goes up while e.g. bitcoin total supply is constant.

Re: You don't understand money – and it's a good thing for Bitcoin

#42

Post by netsharc »

What a terrible crypto-shilling (is that a new currency?) article. Can I have my time back? Since time is money, I'll take 30 euros please.

One thing that crypto-idiots don't understand is that whatever currency it is, it's not worth anything if no one wants to exchange it with food (or clothes or shelter). If in the upcoming Mad Max future that farmer only takes tea leaves, everyone will be running around trying to find tea leaves.

Re: You don't understand money – and it's a good thing for Bitcoin

#43

Post by joe_the_user »

ivalm wrote: post #30
joe_the_user wrote: post #21

Earlier quoted context omitted.

> "I can buy groceries just fine with my Euros, without wondering how exactly it has been created." If literally all you know about money is that it is a token that lets you buy stuff at the grocery store, here is trwhat you don't know - how long is that situation going to hold up. > "Just as I wouldn't tailor my own paragliding chute, because otherwise companies could rip me off." I wouldn't try to sew a normal para…

> how long is that situation going to hold up. But you don't actually need to know the internals in order to know how long it will hold up. You can black box update your probability of fiat currency holding up every month that fiat currency doesn't crash (let's define it as "lose 50% of its value"). In fact, by this metric it's pretty clear that fiat currency probability of holding up is much better then that of most…

Well,

No one can know with certainty whether a given object or situation is going to hold up. Life isn't guaranteed.

Sure, you can tell yourself "X has worked so-far, that makes it continuing to work quite likely". But X is "driving your car without adding gas or oil", that it worked for a while hardly makes it more likely.

And, of course, you can't claim predictive power for a sequence of individual experiences. And if you apply regression to a Ponzi scheme, it will seem like a great idea.

Re: You don't understand money – and it's a good thing for Bitcoin

#44

Post by sedeki »

ivalm wrote: post #41
sedeki wrote: post #37

Earlier quoted context omitted.

I am pretty sure deflation is the big concern with limited supply, not inflation. For exactly the reason that the supply is limited... There are issues of Bitcoin one could argue about - but inflation is not one of them. Give us a concrete scenario.

While deflation is a concern for the economy as a whole people who hold money generally like deflation. A lot of why people bought cryptos is in hopes of massive deflation (egbitcoin price going up). Also, the promise of cryptos is essentially deflationary since productivity (and total world wealth) goes up while e.g. bitcoin total supply is constant.

Deflation means that aggregate prices go down over time. I am not sure what it means that, as you said, people bought cryptos in the hopes that the dollar prices of bitcoins would ”””deflate”””. But sure, prices go up when demand go up - is this unusual?

(Sorry if I came across as arrogant.)

On whether deflation is bad for the economy. The standard example of this is the Great Depression, where massive amounts of credit was created and later people opted out of USD and wanted gold. There were bank-runs, as I’m sure you know. Thus FDR ”banned” gold (he even forced people to return gold or risk confiscation and jail time).

Of course dollar prices go down then, i.e. deflation.

I don’t see this as an argument that deflation is bad.

Or do you have another example or perhaps can correct me?

Re: You don't understand money – and it's a good thing for Bitcoin

#45

Post by School-Cotton »

sedeki wrote: post #40
School-Cotton wrote: post #26

Earlier quoted context omitted.

This is a good reason to buy physical gold and bury it somewhere. I'm not convinced it's a good reason to buy Bitcoin.

Because gold is less risky due to its traditional status as money? Just curious.

Yes. If gold ever completely loses value we are probably living in such a total collapse of civilization that all bets are off. Whereas I can easily imagine a scenario where the Bitcoin fad fizzles out and everyone's coins deflate massively in value.

Re: You don't understand money – and it's a good thing for Bitcoin

#46

Post by ivalm »

sedeki wrote: post #44
ivalm wrote: post #41

Earlier quoted context omitted.

While deflation is a concern for the economy as a whole people who hold money generally like deflation. A lot of why people bought cryptos is in hopes of massive deflation (egbitcoin price going up). Also, the promise of cryptos is essentially deflationary since productivity (and total world wealth) goes up while e.g. bitcoin total supply is constant.

Deflation means that aggregate prices go down over time. I am not sure what it means that, as you said, people bought cryptos in the hopes that the dollar prices of bitcoins would ”””deflate”””. But sure, prices go up when demand go up - is this unusual? (Sorry if I came across as arrogant.) On whether deflation is bad for the economy. The standard example of this is the Great Depression, where massive amounts of cre…

You seemed to suggest in GP that one problem with fiat is that it may become deflationary (ie prices for goods in fiat will go down). I pointed out that Bitcoin is by construction deflationary, prices (in bitcoin) for goods go down as long as bitcoin occupies at least a fixed fraction of total exchange tokens.

Simple example, if bitcoin is the only exchange token in circulation then bitcoin will become more valuable as a function of time simply because the amount of "stuff" increases. This is as opposed to fiat, which increases in supply to compensate the increase of material wealth in the world.

The reason deflation is bad is because it discourages investment. If I can buy more stuff later with the same amount of tokens then I have an incentive to not spend my exchange tokens, thus reducing the total circulation of tokens/investment/etc. It also makes loans more painful (unless interest rates are negative), but if interest rates are sufficiently negative then this encourages people to not deposit money into loan originators (traditionally banks, but in crypto world could be something else).

Re: You don't understand money – and it's a good thing for Bitcoin

#47

Post by ivalm »

joe_the_user wrote: post #43
ivalm wrote: post #30

Earlier quoted context omitted.

> how long is that situation going to hold up. But you don't actually need to know the internals in order to know how long it will hold up. You can black box update your probability of fiat currency holding up every month that fiat currency doesn't crash (let's define it as "lose 50% of its value"). In fact, by this metric it's pretty clear that fiat currency probability of holding up is much better then that of most…

Well, No one can know with certainty whether a given object or situation is going to hold up. Life isn't guaranteed. Sure, you can tell yourself "X has worked so-far, that makes it continuing to work quite likely". But X is "driving your car without adding gas or oil", that it worked for a while hardly makes it more likely. And, of course, you can't claim predictive power for a sequence of individual experiences. And…

Your argument would only work if cryptos performed at least as well as fiat. The fact is all major cryptos have been far more volatile than fiat. In your car example, it might be that fiat is driving a car without adding gas or oil; but by that comparison crypto is driving a car that is actively on fire.

Re: You don't understand money – and it's a good thing for Bitcoin

#48

Post by knocte »

ivalm wrote: post #41
sedeki wrote: post #37

Earlier quoted context omitted.

I am pretty sure deflation is the big concern with limited supply, not inflation. For exactly the reason that the supply is limited... There are issues of Bitcoin one could argue about - but inflation is not one of them. Give us a concrete scenario.

While deflation is a concern for the economy as a whole people who hold money generally like deflation. A lot of why people bought cryptos is in hopes of massive deflation (egbitcoin price going up). Also, the promise of cryptos is essentially deflationary since productivity (and total world wealth) goes up while e.g. bitcoin total supply is constant.

> A lot of why people bought cryptos is in hopes of massive deflation

No. Bitcoin is not a get-rich-quick scheme, it's a not-get-poor-slowly scheme. It's mainly protection against inflation, not hope for massive deflation.

Re: You don't understand money – and it's a good thing for Bitcoin

#49

Post by joe_the_user »

ivalm wrote: post #47
joe_the_user wrote: post #43

Earlier quoted context omitted.

Well, No one can know with certainty whether a given object or situation is going to hold up. Life isn't guaranteed. Sure, you can tell yourself "X has worked so-far, that makes it continuing to work quite likely". But X is "driving your car without adding gas or oil", that it worked for a while hardly makes it more likely. And, of course, you can't claim predictive power for a sequence of individual experiences. And…

Your argument would only work if cryptos performed at least as well as fiat. The fact is all major cryptos have been far more volatile than fiat. In your car example, it might be that fiat is driving a car without adding gas or oil; but by that comparison crypto is driving a car that is actively on fire.

Why do you think my argument has anything to do with Crypto currency?

I make no mention of it and I am simply replying to "black box is a fine way to understand things" arguments. My point, my only point, a point removed from crypto entirely, is that one need specifics and not mere trends, to understand anything.

Re: You don't understand money – and it's a good thing for Bitcoin

#50

Post by ivalm »

knocte wrote: post #48
ivalm wrote: post #41

Earlier quoted context omitted.

While deflation is a concern for the economy as a whole people who hold money generally like deflation. A lot of why people bought cryptos is in hopes of massive deflation (egbitcoin price going up). Also, the promise of cryptos is essentially deflationary since productivity (and total world wealth) goes up while e.g. bitcoin total supply is constant.

> A lot of why people bought cryptos is in hopes of massive deflation No. Bitcoin is not a get-rich-quick scheme, it's a not-get-poor-slowly scheme. It's mainly protection against inflation, not hope for massive deflation.

You say this, but that's not what drives volume. Most crypto volume is on exchanges, not on the chain, and that's due to speculation.
Post reply on HN