91–100 of 110 posts
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> No, they always assume the value of a coin remains constant when discussing subdivision. If you assume the value of the coin doesn't remain constant that would cause FAR far worse problems, so there is no need to go there.
Obviously I can't argue against "problems" you can't be bothered to enumerate.
"If you have a $10 bill and I replace it with ten $1 bills, do you feel richer?" Yes, If I split my 10 into 10 ones and if 9 can pay today for something that cost 10 yesterday, I feel richer. This causes folks to save and horde like in Japan. Because its deflationary. It's more difficult to control the masses via monetary policy if things are deflationary... That's why governments try to maintain slight inflation. Co…
Remember: if you spend your inflationary money NOW on durable goods (canned food, wood, whatever), then you can trade those goods for inflated currency later, and not lose any value.
But, if you don't spend your money (maybe because there is nothing on the market worth buying), then inflation is the natural correction to bring the money supply into balance with the goods supply.
Coupons are not currency. They were trading coupons of 1 hour babysitting to save from spending real currency on hours of babysitting.
Of course a coupon is a currency. What do you thing a currency is? It's a store of value.
Gold coins are a store of value, since the coin itself can be melted down and used as a good (but these days gold has a pile of speculative bubble on top of it)
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Think about that in somewhat more pragmatic terms. Lets say Alice babysits for Bob for 1 coupon per hour. And hoards coupons. Over time as the supply of coupons becomes more precious she can charge larger and larger 'rates' for her services. Eventually she has all the coupons and nobody else can get any baby sitting. At which point we discover her maiden name is Bernanke! And she has set herself to be the central ban…
Once Alice has all the coupons, nobody can get any babysitting because they have consumed babysitting without producing anything. Either they need to start babysitting for Alice, or find something else valuable to sell to Alice, or decline to babysit and leave Alice stuck with a pile of worthless coupons.
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If/when bitcoins ever become an important currency they will have all the same problems as other currencies, and others unique to being bitcoins. E.g. central banks will try to manipulate them, governments will tax and regulate them, and people will speculate on them. Being able to subdivide and increase in value are not attributes unique to bitcoins. Oh, and the article DOES address this exact point.
> Being able to subdivide and increase in value are not attributes unique to bitcoins. I didn't claim that. > Oh, and the article DOES address this exact point. No, they always assume the value of a coin remains constant when discussing subdivision.
This seems to address the point to me. If the supply of dollars is constrained (liquidity trap) then deflation does NOT make people happier.
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Subdiving does not increase the overall supply of Bitcoin though. There would be no way in the future to obtain Bitcoin, except by taking it from someone else. Or someone else's hoard, as the case may be. (This is at least briefly touched on in the article) This is also covered in the book "Debt: The First 5000 Years", when gold-standard and silver-standard monarchies had real problems keeping money in circulation du…
For liquidity, what matters is that the VALUE of the liquidity is adequate. Whether you're trading full bitcoins or fractions of a bitcoin doesn't matter.
In other words, when people run out of physical goods to trade, they will start trading IOUs, at which point inflation has occurred within your economy whether you intended it to or not.
Is it "inflation" if each new IOU is accompanied by a corresponding unit of production? I thought not, but I am no expert.
Economies are naturally structured around this asynchronous trading structure because we want to help each other survive.
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Float compared to supply and demand in a free market. Instead of issuing 1-hour coupons, they should have issued an arbitrary currency, say, Shillings. Then buyers can request babysitting paying at 1 shilling per hour, and sellers could say that they want 1.3 shillings per hour. The value of the currency needs to float with supply and demand. The whole argument in the article is a pathetic straw-man. The value of bit…
The value of bitcoins floats with supply and demand, that is correct. However the demand for any currency is tied to the supply/demand for the total number of goods that are sold/bought with that currency. As the value of these goods rises over time towards infinity demand for bitcoins will rise over time towards infinity. Supply of bitcoins on the other hand is inevitably slowing down and thereby the value of bitcoi…
How is gold different?
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Realistically, Bitcoiners can't even agree to fix unspendable UTXOs. I can't imagine that they would ever agree to devalue their own holdings.
What is there to fix? Can't a minority client just blackball UTXOs, allowing them to exist in the blockchain but refusing to publish or accept transactions built off them? By definition, a UTXO is not in the history of good money.
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The value of bitcoins floats with supply and demand, that is correct. However the demand for any currency is tied to the supply/demand for the total number of goods that are sold/bought with that currency. As the value of these goods rises over time towards infinity demand for bitcoins will rise over time towards infinity. Supply of bitcoins on the other hand is inevitably slowing down and thereby the value of bitcoi…
Interesting. Do we have the same situation with gold? Continuous deflation, caused by constant supply combined with increasing demand, causing its value to rise to infinity? How is gold different?