Hello, this is my first post on this thread I couldn't read 50 pages of internet discussion so kindly correct me if anything I'm assuming is obviously wrong.
BTC main value proposition is to be a decentralized currency and/or value store.
I understand price inflation is considered bad because it unfairly damages savers vs consumers. On the other side, some people can handle inflation reasonably well by re-indexing contracts every so often. This is common behavior in countries with high inflation, and again I understand it still damages savers but the damage can be reasonably controlled. Additionally, some would argue that inflation is bad even for those prepared for it because it raises the cost of doing business.
The point that I want to discuss is, isn't bitcoin's price fluctuation equally bad to inflation in the fact it raises the cost of doing business?
If we all accept BTC as a volatile store of value, does it imply it can't be the decentralized currency most would use?
Now let me try to explain some of my assumptions: 1. BTC price will always be volatile.
The BTC supply increasing rate is positive, that rate is fixed looking in the short term (30-90 days). On the other side, demand is highly unpredictable. Fixed supply and highly unpredictable demands cause unpredictable prices.
Common counter arguments:
1 "BTC is volatile but it always rises in the long-term so it doesn't matter". Is it does, it increases the cost of business. I can't start a bakery with only BTC capital because in the first dip I will have to take loans to pay wages.
1.1 "Oh, but you can't see that happening because you can't see far enough." This sounds like a highly utopian view. Pragmatically, we need a path from here to there, I turn to you and ask, how can we get there?
1.2 "Okay, it doesn't matter for some people and that's all". Okay, then BTC will be a niche store of value.
2 "Demand will stabilize in the long term." How?
3 "Price stability is a myth, market demands always change them" Sure, it's a myth. Yet it is desirable. If we are designing the system, shouldn't we take that in account? "No, we shouldn't, if you want to do that go and create your own coin." Okay, then BTC will be a niche store of value.
Right now it looks to me that price instability prevents BTC wide adoption.
What incentives do savers have to buy-in on a inflationary money supply? The incentive of stability? That's one reason people agree being exposed to the USD. Am I defending inflation tax? No. I'm asking could there be benefits to having a transparent voluntary contract with varying money supply rate. And I'm leaning towards a yes to this question.
If the supply of a coin could be influenced by price then we would have a more stable coin, the cost we pay is inflation. The issue then becomes an optimization issue, on what would be a proper trade-off.
What are your thoughts?
👍🏻 BTC main value proposition is to be a decentralized currency and/or value store.
I understand price inflation is considered bad because it unfairly damages savers vs consumers. On the other side, some people can handle inflation reasonably well by re-indexing contracts every so often. This is common behavior in countries with high inflation, and again I understand it still damages savers but the damage can be reasonably controlled. Additionally, some would argue that inflation is bad even for those prepared for it because it raises the cost of doing business.
The point that I want to discuss is, isn't bitcoin's price fluctuation equally bad to inflation in the fact it raises the cost of doing business?
If we all accept BTC as a volatile store of value, does it imply it can't be the decentralized currency most would use?
Now let me try to explain some of my assumptions: 1. BTC price will always be volatile.
The BTC supply increasing rate is positive, that rate is fixed looking in the short term (30-90 days). On the other side, demand is highly unpredictable. Fixed supply and highly unpredictable demands cause unpredictable prices.
Common counter arguments:
1 "BTC is volatile but it always rises in the long-term so it doesn't matter". Is it does, it increases the cost of business. I can't start a bakery with only BTC capital because in the first dip I will have to take loans to pay wages.
1.1 "Oh, but you can't see that happening because you can't see far enough." This sounds like a highly utopian view. Pragmatically, we need a path from here to there, I turn to you and ask, how can we get there?
1.2 "Okay, it doesn't matter for some people and that's all". Okay, then BTC will be a niche store of value.
2 "Demand will stabilize in the long term." How?
3 "Price stability is a myth, market demands always change them" Sure, it's a myth. Yet it is desirable. If we are designing the system, shouldn't we take that in account? "No, we shouldn't, if you want to do that go and create your own coin." Okay, then BTC will be a niche store of value.
Right now it looks to me that price instability prevents BTC wide adoption.
What incentives do savers have to buy-in on a inflationary money supply? The incentive of stability? That's one reason people agree being exposed to the USD. Am I defending inflation tax? No. I'm asking could there be benefits to having a transparent voluntary contract with varying money supply rate. And I'm leaning towards a yes to this question.
If the supply of a coin could be influenced by price then we would have a more stable coin, the cost we pay is inflation. The issue then becomes an optimization issue, on what would be a proper trade-off.
What are your thoughts?
