I think what people are mistaking is bitcoin doesn't have to be "currency" by itself, bitcoin could be like gold that supplements the economy but has the advantage of being used for purchases as well. I mean being able to purchase something with bitcoin doesn't have to be the main selling point for bitcoin, it is a great thing to have and I am glad we are capable of doing it specially online however it doesn't have to be the main topic.
Bitcoin could have that option but still could be like gold where people who have excess money that they saved over the years invest into bitcoin and wait for it to mature, you do not look at gold prices every single day unless you are some sort of margin day trader, any normal citizen in the world will look at it only when they need to cash out and bitcoin could be perfect for that.
Topic: Deflation based currency such as Bitcoin to counter promote economy. - page 2. (Read 12611 times)
May 16, 2019, 10:13:24 AM
May 16, 2019, 06:07:30 AM
Currently, all major currencies issued by the government have natural inflation of about 2%.
Bitcoin, on the other hand, is much different, it, in fact, does not have any inflation but deflation.
Bitcoins are created less and less and the number of users does not affect the quantity of creation of Bitcoins.
Inflation on a low level promotes spending while deflation in Bitcoin promotes holding...
My question is, would an economy with a deflation based currency such as Bitcoin work?
Deflation of a currency is also not good for an economy and it can't be used as payment method as well.For that we have to get something stable price range for bitcoin and most of the people hoping that it will happen when most people adopted crypto currency as type of payment. Bitcoin, on the other hand, is much different, it, in fact, does not have any inflation but deflation.
Bitcoins are created less and less and the number of users does not affect the quantity of creation of Bitcoins.
Inflation on a low level promotes spending while deflation in Bitcoin promotes holding...
My question is, would an economy with a deflation based currency such as Bitcoin work?
May 16, 2019, 04:46:55 AM
What do you think, for example, of a society where people are encouraged to think more of today that of tomorrow? I agree that all the people can't (and shouldn't) live like that, but maybe for the vast majority this model can be a good choice. And by "encouraged" I don't mean giving them loans, basically making slaves out of them, that's what we have today. It should be something else, something that makes people happy with their lives right now without overspending
Most likely, it will be "incompatible with life"
And then someone will start blaming its failure on life itself. The point is, we can't do anything economically to change the current state conceptually.
It wasn't my intention to go off-topic, and I'm sorry that I didn't explain what I meant more precisely. By "happy" I meant economically happy. There are more happy people in North Korea than in Switzerland, in percentage terms, but that zombie-happiness has nothing to do with the economical one. People are starving in North Korea, and they are definitely not economically happy. Since we are in the Economy section, let's talk in economic terms only
But that's the problem
As it pretty much means there's is nothing to discuss in that case because any discussion in that direction assumes that some deep changes in the human nature have already occurred. But that implies we should first define these changes, i.e. what a fresh human should look like, metaphorically speaking, for the new laws of economics not to fall to pieces and be "compatible with life". Put simple, we should define that life (and its life forms). Otherwise, we will be talking about "economic communism"
It is like trying to discover a new physical law in the nature, which is highly unlikely in this Universe. So our only choice is to change humans themselves (or wait for that to come about naturally). ~
Yet, Albert Einstein proposed such a law, and it has been working until today. If you would tell physicists in the end of 19th century that time is dependent on speed and on the distance from a heavy object, they'd call you crazy ... But, sorry, I'm going off topic again
That was just an example
And while we are at it, he was not alone back then and he was definitely not the last one at that. The fundamental laws of quantum mechanics (e.g. Heisenberg's uncertainty principle) were discovered some time after "Albert Einstein had proposed such a law"
May 16, 2019, 03:55:55 AM
I guess the question is not actually "will it work", its more like "what will it become". After all we can see how it could actually work, it works right now, we have over 200 billion dollars in marketcap, that is more than some of the smallest countries stock markets combined, which means bitcoin actually works. The question should be will bitcoin ever be used daily for regular stuff since it has a deflation based system.
Considering you can actually buy something for small but then bitcoin goes up so that payment you just made became a lot larger whereas a 10 thousand dollar worth of house 50 years ago worth over a million today. That is why I think bitcoin will replace stock markets and forex and stuff like that for regular people but it will have a huge problem with regular daily stuff payments.
Considering you can actually buy something for small but then bitcoin goes up so that payment you just made became a lot larger whereas a 10 thousand dollar worth of house 50 years ago worth over a million today. That is why I think bitcoin will replace stock markets and forex and stuff like that for regular people but it will have a huge problem with regular daily stuff payments.
May 16, 2019, 01:42:07 AM
What do you think, for example, of a society where people are encouraged to think more of today that of tomorrow? I agree that all the people can't (and shouldn't) live like that, but maybe for the vast majority this model can be a good choice. And by "encouraged" I don't mean giving them loans, basically making slaves out of them, that's what we have today. It should be something else, something that makes people happy with their lives right now without overspending
Most likely, it will be "incompatible with life"
And then someone will start blaming its failure on life itself. The point is, we can't do anything economically to change the current state conceptually.
It wasn't my intention to go off-topic, and I'm sorry that I didn't explain what I meant more precisely. By "happy" I meant economically happy. There are more happy people in North Korea than in Switzerland, in percentage terms, but that zombie-happiness has nothing to do with the economical one. People are starving in North Korea, and they are definitely not economically happy. Since we are in the Economy section, let's talk in economic terms only.
It is like trying to discover a new physical law in the nature, which is highly unlikely in this Universe. So our only choice is to change humans themselves (or wait for that to come about naturally). ~
Yet, Albert Einstein proposed such a law, and it has been working until today. If you would tell physicists in the end of 19th century that time is dependent on speed and on the distance from a heavy object, they'd call you crazy ... But, sorry, I'm going off topic again.
My main point is that I think maybe there can be a working economic model of Bitcoin-based economy, a new economic system for which inflation is not a mandatory component.
May 15, 2019, 03:57:55 PM
Some define deflation as the decrease in the money supply and each day more bitcoin is being mined so this is not accurate, what happens is that eventually the rate at which bitcoin is being mined will be very small compared to the available supply but it will still count as inflation, now if what you are talking about is the amount of bitcoin lost, the truth is that those coins are not lost forever since someone could generate the private key in the future by accident and they could move and use those coins as they please, this is unlikely but there is a very small chance of that happening.
Who said deflation refers to decrease in supply? The concept of inflation/deflation is not proportional to supply rather it is related to price
Personally, I keep to the same convention
But whenever possible (which is almost always) I myself use the term appreciating (depreciating) currency if i want to make it cleat that I refer to the deflation (inflation) of prices. Like I said, I have no grudge against anyone using the terms in respect to changes in prices but when I first tried to use the terms inflation and deflation in this context specifically (i.e. in respect to purchasing power of a currency), I was surprised that some people were hellbent on proving that deflation as well as inflation is related only to the money supply (as in shrinking or expanding)
May 15, 2019, 02:05:49 PM
Some define deflation as the decrease in the money supply and each day more bitcoin is being mined so this is not accurate, what happens is that eventually the rate at which bitcoin is being mined will be very small compared to the available supply but it will still count as inflation, now if what you are talking about is the amount of bitcoin lost, the truth is that those coins are not lost forever since someone could generate the private key in the future by accident and they could move and use those coins as they please, this is unlikely but there is a very small chance of that happening.
Who said deflation refers to decrease in supply? The concept of inflation/deflation is not proportional to supply rather it is related to price.
You can't say Bitcoin is inflationary because new bitcoins are mined everyday. When you compare the rise in demand of Bitcoin with rise in supply, you will notice that demand is rising at much more rate than supply. This is what causing surge in Bitcoin prices. Thus, the value of other commodities in terms of Bitcoin is decreasing as the demand is rising and new supply is shrinking with every halvening. This makes the Bitcoin deflationary.
May 15, 2019, 01:02:05 PM
Currently, all major currencies issued by the government have natural inflation of about 2%.
Bitcoin, on the other hand, is much different, it, in fact, does not have any inflation but deflation.
Bitcoins are created less and less and the number of users does not affect the quantity of creation of Bitcoins.
Inflation on a low level promotes spending while deflation in Bitcoin promotes holding...
My question is, would an economy with a deflation based currency such as Bitcoin work?
Some define deflation as the decrease in the money supply and each day more bitcoin is being mined so this is not accurate, what happens is that eventually the rate at which bitcoin is being mined will be very small compared to the available supply but it will still count as inflation, now if what you are talking about is the amount of bitcoin lost, the truth is that those coins are not lost forever since someone could generate the private key in the future by accident and they could move and use those coins as they please, this is unlikely but there is a very small chance of that happening. Bitcoin, on the other hand, is much different, it, in fact, does not have any inflation but deflation.
Bitcoins are created less and less and the number of users does not affect the quantity of creation of Bitcoins.
Inflation on a low level promotes spending while deflation in Bitcoin promotes holding...
My question is, would an economy with a deflation based currency such as Bitcoin work?
May 15, 2019, 05:45:17 AM
What do you think, for example, of a society where people are encouraged to think more of today that of tomorrow? I agree that all the people can't (and shouldn't) live like that, but maybe for the vast majority this model can be a good choice. And by "encouraged" I don't mean giving them loans, basically making slaves out of them, that's what we have today. It should be something else, something that makes people happy with their lives right now without overspending
Most likely, it will be "incompatible with life"
And then someone will start blaming its failure on life itself. The point is, we can't do anything economically to change the current state conceptually. It is like trying to discover a new physical law in the nature, which is highly unlikely in this Universe. So our only choice is to change humans themselves (or wait for that to come about naturally). But that would have more to do with eugenics rather than economics (read, not everyone will be happy). Otherwise, it may take long years, actually many thousands if not millions of years (unless we stick with some form of eugenics after all)
May 15, 2019, 04:21:15 AM
~
I understand your point. Almost every economist from the old school would agree with you. And by "old school" I don't mean something that is from the past. I understand that those are the economists that are in charge right now. I just think that maybe here, on bitcointalk, we can come up with an idea of a new economic system for which inflation will not be a mandatory component. I know it may seem too ambitious, but we can try at least
I understand your point. Almost every economist from the old school would agree with you. And by "old school" I don't mean something that is from the past. I understand that those are the economists that are in charge right now. I just think that maybe here, on bitcointalk, we can come up with an idea of a new economic system for which inflation will not be a mandatory component. I know it may seem too ambitious, but we can try at least
In simple terms, you can't run an economy on an appreciating currency
Well, technically, if the economy is quickly expanding economy, e.g. due to a major shift in technology (like free unlimited energy for all), its expansion can somewhat offset the burden of an appreciating currency that it puts on producers and their profit margins (read, these margins are so high that they can compensate for the negative effect of deflation). But it won't last forever and ultimately deflation will start to eat away at producers' profits and that will send the economy into the death spiral of first stagnation and then depression
Again, you are talking in terms of a system that has been working for more than 200 years, and I personally can't propose anything better, I'm not that smart, but I think maybe someone can. Or, we can do it together by proposing and discussing various ideas.
What do you think, for example, of a society where people are encouraged to think more of today that of tomorrow? I agree that all the people can't (and shouldn't) live like that, but maybe for the vast majority this model can be a good choice. And by "encouraged" I don't mean giving them loans, basically making slaves out of them, that's what we have today. It should be something else, something that makes people happy with their lives right now without overspending.
I personally think that current capitalist economy is the best one around. But I also agree with people who say that it is falling apart, and that something new have to be implemented in the nearest future
It all comes down to people and their flaws
Communism doesn't work exactly because of that. But we are what we are. Isn't it ridiculous to invent a system that is incompatible with life and then blame it on life?
May 14, 2019, 11:59:35 PM
It is assumed (at least so I think) that a currency is constantly appreciating in value, which is a safe assumption if the supply is limited and tapers off eventually. Indeed, Bitcoin, with its wild price fluctuations, is far from such a currency but you can take gold as another, more solid example. People are hoarding gold, and if it was used as a currency today as it had been a few hundred years ago, it would cut pretty close to that. They would hoard it even more, though it would likely mean an imminent collapse of the whole economy in less than no time
I understand your point. Almost every economist from the old school would agree with you. And by "old school" I don't mean something that is from the past. I understand that those are the economists that are in charge right now. I just think that maybe here, on bitcointalk, we can come up with an idea of a new economic system for which inflation will not be a mandatory component. I know it may seem too ambitious, but we can try at least
In simple terms, you can't run an economy on an appreciating currency
Well, technically, if the economy is quickly expanding economy, e.g. due to a major shift in technology (like free unlimited energy for all), its expansion can somewhat offset the burden of an appreciating currency that it puts on producers and their profit margins (read, these margins are so high that they can compensate for the negative effect of deflation). But it won't last forever and ultimately deflation will start to eat away at producers' profits and that will send the economy into the death spiral of first stagnation and then depression
I personally think that current capitalist economy is the best one around. But I also agree with people who say that it is falling apart, and that something new have to be implemented in the nearest future
It all comes down to people and their flaws
May 14, 2019, 10:10:07 AM
It does work in a sense that its a great investment opportunity. When you have a currency that promotes holding and waiting out that becomes an investment, if you are going to make a currency that you want people to invest then what bitcoin is doing is great and that is why I definitely prefer this over investing into banks or investing into stocks and so forth.
Nevertheless, when it comes to using bitcoin for daily stuff it is making a bit of a challenge, why would you want to spend something that will get bigger in price ? The thing you bought for 100 bucks right now could worth 200 bucks tomorrow with the bitcoin you paid, so you are going to consider how if you paid with fiat only 100 bucks will be gone but your 200 bucks worth of bitcoin is gone now which makes it harder for mass adoption since people prefer to keep it.
It is not destroying bitcoin at all since its still a viable investment option but its creating issues for daily use for sure.
Nevertheless, when it comes to using bitcoin for daily stuff it is making a bit of a challenge, why would you want to spend something that will get bigger in price ? The thing you bought for 100 bucks right now could worth 200 bucks tomorrow with the bitcoin you paid, so you are going to consider how if you paid with fiat only 100 bucks will be gone but your 200 bucks worth of bitcoin is gone now which makes it harder for mass adoption since people prefer to keep it.
It is not destroying bitcoin at all since its still a viable investment option but its creating issues for daily use for sure.
May 14, 2019, 04:33:54 AM
~
When people can buy more with less tomorrow, the hoarding will in fact be encouraged since how otherwise can you encourage it if by not increasing the purchasing power of a currency? It is easy money. Indeed, people will have to spend something to provide for simple sustenance but it is the aggregate demand that counts in the end, which is going down when a currency appreciates. On the other hand, inflation incentivizes people to spend money as soon as they receive it to avoid losing its purchasing power
When people can buy more with less tomorrow, the hoarding will in fact be encouraged since how otherwise can you encourage it if by not increasing the purchasing power of a currency? It is easy money. Indeed, people will have to spend something to provide for simple sustenance but it is the aggregate demand that counts in the end, which is going down when a currency appreciates. On the other hand, inflation incentivizes people to spend money as soon as they receive it to avoid losing its purchasing power
But this is not what happens in reality. Bitcoin was $19k in December 2017 and has been basically going down since until recently. It's not daily fluctuations, which we could ignore, we are talking about years here. Same behavior patterns happened before and will be happening in the future, as we all know. There is no such thing as "people can buy more with less tomorrow" regarding Bitcoin on a yearly basis, let alone on a daily one
But the question is not about Bitcoin as such
It is assumed (at least so I think) that a currency is constantly appreciating in value, which is a safe assumption if the supply is limited and tapers off eventually. Indeed, Bitcoin, with its wild price fluctuations, is far from such a currency but you can take gold as another, more solid example. People are hoarding gold, and if it was used as a currency today as it had been a few hundred years ago, it would cut pretty close to that. They would hoard it even more, though it would likely mean an imminent collapse of the whole economy in less than no time
I understand your point. Almost every economist from the old school would agree with you. And by "old school" I don't mean something that is from the past. I understand that those are the economists that are in charge right now. I just think that maybe here, on bitcointalk, we can come up with an idea of a new economic system for which inflation will not be a mandatory component. I know it may seem too ambitious, but we can try at least.
I personally think that current capitalist economy is the best one around. But I also agree with people who say that it is falling apart, and that something new have to be implemented in the nearest future.
May 13, 2019, 01:45:45 PM
~
When people can buy more with less tomorrow, the hoarding will in fact be encouraged since how otherwise can you encourage it if by not increasing the purchasing power of a currency? It is easy money. Indeed, people will have to spend something to provide for simple sustenance but it is the aggregate demand that counts in the end, which is going down when a currency appreciates. On the other hand, inflation incentivizes people to spend money as soon as they receive it to avoid losing its purchasing power
When people can buy more with less tomorrow, the hoarding will in fact be encouraged since how otherwise can you encourage it if by not increasing the purchasing power of a currency? It is easy money. Indeed, people will have to spend something to provide for simple sustenance but it is the aggregate demand that counts in the end, which is going down when a currency appreciates. On the other hand, inflation incentivizes people to spend money as soon as they receive it to avoid losing its purchasing power
But this is not what happens in reality. Bitcoin was $19k in December 2017 and has been basically going down since until recently. It's not daily fluctuations, which we could ignore, we are talking about years here. Same behavior patterns happened before and will be happening in the future, as we all know. There is no such thing as "people can buy more with less tomorrow" regarding Bitcoin on a yearly basis, let alone on a daily one
But the question is not about Bitcoin as such
It is assumed (at least so I think) that a currency is constantly appreciating in value, which is a safe assumption if the supply is limited and tapers off eventually. Indeed, Bitcoin, with its wild price fluctuations, is far from such a currency but you can take gold as another, more solid example. People are hoarding gold, and if it was used as a currency today as it had been a few hundred years ago, it would cut pretty close to that. They would hoard it even more, though it would likely mean an imminent collapse of the whole economy in less than no time
May 13, 2019, 10:02:44 AM
Currently, all major currencies issued by the government have natural inflation of about 2%.
Bitcoin, on the other hand, is much different, it, in fact, does not have any inflation but deflation.
Bitcoins are created less and less and the number of users does not affect the quantity of creation of Bitcoins.
Inflation on a low level promotes spending while deflation in Bitcoin promotes holding...
My question is, would an economy with a deflation based currency such as Bitcoin work?
Bitcoin, on the other hand, is much different, it, in fact, does not have any inflation but deflation.
Bitcoins are created less and less and the number of users does not affect the quantity of creation of Bitcoins.
Inflation on a low level promotes spending while deflation in Bitcoin promotes holding...
My question is, would an economy with a deflation based currency such as Bitcoin work?
Deflation? Means it is not increasing? Correct me if I'm wrong dude but Bitcoin has bot inflation and deflation aspects because any given moment it will grow and decrease regarding on how people use it's technology. Anyways, government will not be depending on a volatile currency to gamble for it's economic growth.
May 13, 2019, 05:36:28 AM
~
When people can buy more with less tomorrow, the hoarding will in fact be encouraged since how otherwise can you encourage it if by not increasing the purchasing power of a currency? It is easy money. Indeed, people will have to spend something to provide for simple sustenance but it is the aggregate demand that counts in the end, which is going down when a currency appreciates. On the other hand, inflation incentivizes people to spend money as soon as they receive it to avoid losing its purchasing power
When people can buy more with less tomorrow, the hoarding will in fact be encouraged since how otherwise can you encourage it if by not increasing the purchasing power of a currency? It is easy money. Indeed, people will have to spend something to provide for simple sustenance but it is the aggregate demand that counts in the end, which is going down when a currency appreciates. On the other hand, inflation incentivizes people to spend money as soon as they receive it to avoid losing its purchasing power
But this is not what happens in reality. Bitcoin was $19k in December 2017 and has been basically going down since until recently. It's not daily fluctuations, which we could ignore, we are talking about years here. Same behavior patterns happened before and will be happening in the future, as we all know. There is no such thing as "people can buy more with less tomorrow" regarding Bitcoin on a yearly basis, let alone on a daily one.
I'm not saying I know how can economy work with Bitcoin as a single currency, but what I know is that "You can buy with 1 USD tomorrow less than you can buy with it today" and "You can 1 BTC tomorrow more than you can buy with it today" are false assumptions on a daily basis.
I would like to say more about USD and its incentivising power, so to speak. Average inflation rate of USD is about 2% per year. How many of us would buy all the rice we would probably need in 2020 today, in order to pay for 1 kg $3.80 today instead of paying $3.88 in 2020?
May 13, 2019, 03:48:43 AM
My question is, would an economy with a deflation based currency such as Bitcoin work?
Does this not sound as a contradiction where you have said bitcoin is a deflated currency and we understand that a country will hardly work with a deflated currency because it will fall the standard of living, goods, commodities and services will be high. It is clear it won't work.
May 13, 2019, 02:50:58 AM
They would better create another than choose one like bitcoin even if it is already the best option out there.
Pride? No. It is the control that they want. How could they manipulate everything if they cannot even have the upperhand.
We say bitcoin is already being manipulated but no. As long as you dont have the the mainframe there will always be a chance for others to take part.
History already speaks for itself. They used gold cause they can control it and created fiat for the same purpose.
Pride? No. It is the control that they want. How could they manipulate everything if they cannot even have the upperhand.
We say bitcoin is already being manipulated but no. As long as you dont have the the mainframe there will always be a chance for others to take part.
History already speaks for itself. They used gold cause they can control it and created fiat for the same purpose.
May 12, 2019, 09:58:34 AM
The economy of any state can work effectively only on the basis of its national money. However, no economy will be able to function if only decentralized cryptocurrency is allowed in the state. Such a cryptocurrency in a short time will quickly unbalance the economy of any state. Cryptocurrency can and should go in society only along with the national currencies of the states. Using only cryptocurrency will not destroy the economy, but will affect it very negatively.
May 12, 2019, 09:48:48 AM
The fact is the deflation based Currency as you would say doesn't govern major stocks in the market and at the same time it doesn't actually doesn't work as Integrated with the government as you think , if deflation was the enemy then the entire stock market should be wiped out along with other things who are considered investments and go down in price.
This deflation based Currency is actually something that had proven experts wrong and given more profit that it could ever would.
Therefore I won't ever doubt it's potential.
It's very essential for our current generation, it's true that we cannot entirely give the entire power of money to Bitcoins and others since they are unstable ,but we cannot even separate it from them.
This deflation based Currency is actually something that had proven experts wrong and given more profit that it could ever would.
Therefore I won't ever doubt it's potential.
It's very essential for our current generation, it's true that we cannot entirely give the entire power of money to Bitcoins and others since they are unstable ,but we cannot even separate it from them.
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