A Prediction: Bitcoin Is Doomed to Fail

Post by dinkumthinkum » Thu, Nov 28, 2013, 6:54 AM UTC

vijayboyapati wrote: post #12

He is essentially giving the chartalist theory of money. Money cannot arise except through the fiat of the state. Chartalists hate the Mengerian theory on the origin of money because it posits that money arises as a market phenomena. Eventually the state co-opted money, but that does not mean money arose because of the state. The emergence of bitcoin is a thorn in the side to chartalists. We can't really go back and…

Post by Bootvis » Thu, Nov 28, 2013, 7:08 AM UTC

drcube wrote: post #109

Bootvis wrote: post #88

Earlier quoted context omitted.

I'm not saying that Friedman is right but this is a thorny issue in economics: Inflation is always and everywhere a monetary phenomenon. —Milton Friedman, 1963

Sure, it's a monetary phenomenon, but that doesn't mean it always comes from monetary policy. In fact, the big reason monetary policy exists is to control inflation. Without monetary policy, inflation and deflation depend solely on the production of the economy compared to the relatively fixed supply of money. Which is what will happen if bitcoin takes off. Growing economy + fixed money supply = deflation. So the GP…

Post by dwaltrip » Thu, Nov 28, 2013, 7:18 AM UTC

djur wrote: post #327

dwaltrip wrote: post #293

Earlier quoted context omitted.

Payment processors such as bitpay offer same-day bitcoin-to-fiat conversion and bank deposit with extremely low fees (0.1% - 1%), and are becoming the defacto standard. This is expected during the bootstrapping phase. Later, if bitcoin firmly establishes itself, merchants could choose to not convert directly to fiat.

Merchants would still need to convert to legal tender for payroll, rent, and taxes. Their income and expenses would still be more efficiently denominated in dollars (or the local equivalent). What is the expected draw for businesses to keep their operating funds in BTC as opposed to USD?

Post by dinkumthinkum » Thu, Nov 28, 2013, 7:24 AM UTC

agraddy wrote: post #77

My prediction is that Bitcoin (or some other alt-coin/cryptocurrency) will eventually become a single worldwide currency. It's reached a point where if a government tries to regulate it too tightly, they will effectively be shooting themselves in the foot and cutting their country off from outside trade. The result is that the cryptocurrency will continue to gain momentum until it is used everywhere worldwide. This w…

Post by maaku » Thu, Nov 28, 2013, 7:46 AM UTC

Bootvis wrote: post #343

drcube wrote: post #109

Earlier quoted context omitted.

Sure, it's a monetary phenomenon, but that doesn't mean it always comes from monetary policy. In fact, the big reason monetary policy exists is to control inflation. Without monetary policy, inflation and deflation depend solely on the production of the economy compared to the relatively fixed supply of money. Which is what will happen if bitcoin takes off. Growing economy + fixed money supply = deflation. So the GP…

However, with Bitcoin the percentage claim on the total economy is constant. So, in a sense, the real price of all consumer goods also remains constant. In this view there is no inflation or deflation and inflation indeed is a purely monetary phenomenon. What is correct view? I don't know, the only thing I remember about the monetary economics class I took, is that the professor and I didn't agree. About what I don't…