A huge test of the majority peoples feeling about deflation - page 2.

sunnankar

legendary

Activity: 1031

Merit: 1000

Quote from: johnyj on July 31, 2012, 10:18:35 AM

I think the later to be quite mind twisting, against common sense, e.g. not majority of people think in this way, but this might also depends on people's mathematical skills and awareness of economy/financial

First, we all know that cryptographers are not any good at the maths so they will be particularly mind twisted.

Second, Bitcoin is inflationary, not deflationary, as you have asserted. Inflation is the increase in the currency supply. For the next few decades, there will always be a constant increase in the supply of bitcoins created. The block reward changing will merely decrease the rate of increase but the rate of change will still be positive and therefore inflation of bitcoins will still be happening.

Third, with regards to miner's income just look at the performance of the GIGAMINING or BITBOND assets. On 7 May 2012 GIGAMINING produced 0.02333570 BTC per bond or about $0.122512425. On 27 Aug 2012 it will produce approximately 0.01731418 BTC per bond (~75%) about $0.174474055 (~142%). The differences are due to changes in difficulty and exchange rate.

Stephen Gornick

legendary

Activity: 2506

Merit: 1010

Quote from: johnyj on July 31, 2012, 10:18:35 AM

If most of the people have difficulty to quickly judge the value of BTC, it might stopping them from using this coin as a medium of exchange

You are confusing using the currency as a medium of exchange and holding bitcoins for speculation.

If I convert dollars to bitcoins to make a purchase, I really don't care what the exchange rate is. $50 worth of bitcoins costs $50 today. A week from now, it will also take $50 to buy $50 worth of bitcoins.

Additionally, you aren't considering the comparative cost between using bitcoin as a payment method versus credit card. Some merchants offer cash discounts. In the U.S. this is seen where there are two prices at the pump, a cash price and another price when paid using credit or debit card. Bitcoin has this same cost advantage.

Because bitcoin has such dramatically lower payment network merchant fees, it can be used by a merchant for competitive advantage.

So you you buy $100 at NewEgg, and your option is to pay $98 worth of bitcoin or $100 if using your credit card, which method might you use to pay?

For those who are speculating, as long as you can replenish your BTC wallet to allow you to use bitcoins for spending yet maintain a certain level of investment then there's no resistance to using bitcoins for payment.

molecular

donator

Activity: 2772

Merit: 1019

Quote from: nevafuse on July 31, 2012, 11:10:54 AM

Quote from: johnyj on July 31, 2012, 10:18:35 AM

With difficulty rise quickly in a couple of weeks, miners will see their BTC production speed decrease very quickly, so in terms of BTC income, it is getting less and less everyday (unless they keep expanding the mining scale)

Regardless of the reducing reward size, with exception of the bubble last summer, the currency has been deflating for a while.

hm? Bitcoin supply has been inflating and will continue to inflate for a couple of decades.

Are you talking about falling "prices" maybe? If so: the reason is not deflation. Maybe inflation of USD, but certainly not deflation of bitcoin.

nevafuse

sr. member

Activity: 247

Merit: 250

Quote from: johnyj on July 31, 2012, 10:18:35 AM

With difficulty rise quickly in a couple of weeks, miners will see their BTC production speed decrease very quickly, so in terms of BTC income, it is getting less and less everyday (unless they keep expanding the mining scale)

Regardless of the reducing reward size, with exception of the bubble last summer, the currency has been deflating for a while.

Quote from: johnyj on July 31, 2012, 10:18:35 AM

or they feel more comfortable with decreased amount of BTC income at a increased value?

And people are more comfortable having a savings account that makes less interest than inflation? Why does the only way to avoid inflation have to involve the risky/complicated stock market? I think it makes a lot more sense to be able to put money in a savings account & have it worth the same or more later even w/o interest. You shouldn't have to take on so much risk to save your hard earned money. This only allows the rich to keep getting richer because they are the only ones w/ access to stock advisers & financial planners to make sure their savings doesn't become worthless. At the very least I should be able to stash cash in my mattress & have it be worth the same years later. People are stuck with the mentality that if my savings is going to be worth less tomorrow I might as well spend it today. Now none of these people have safety nets in case things go bad. And for critics that claim this will cause people to hoard their money, I still have to buy things. I can't live without food, water, safety, shelter, transportation, etc.

johnyj

legendary

Activity: 1988

Merit: 1012

Beyond Imagination

As we all know, BTC is deflative in nature, and now time has come to test people's tolerance for deflation

With difficulty rise quickly in a couple of weeks, miners will see their BTC production speed decrease very quickly, so in terms of BTC income, it is getting less and less everyday (unless they keep expanding the mining scale)

At the same time, the BTC/USD exchange price has almost doubled. So in terms of income measured by USD, it actually increased

But this is a psychological question: Does people feel more comfortable with increased amount of BTC income at same stable value or they feel more comfortable with decreased amount of BTC income at a increased value?

I think the later to be quite mind twisting, against common sense, e.g. not majority of people think in this way, but this might also depends on people's mathematical skills and awareness of economy/financial

If most of the people have difficulty to quickly judge the value of BTC, it might stopping them from using this coin as a medium of exchange

Topic: A huge test of the majority peoples feeling about deflation - page 2. (Read 2482 times)