Topic: LN+segwit vs big blocks, levels of centralization. - page 5. (Read 8897 times)

Of course it is both. If one isn't spending btc, then one is saving... just like any other currency. Saving is an accumulations of asset.

Sure, but I'm sick of people saying Bitcoin can't be a currency and an asset, because it is in fact both.

Yes, but a 'bad' asset. The value is debased all the time. One needs interest on saving to compensate for inflation, look at the interest now... piddling small. Don't bother speculating on dollars. There are better assets that will bring one a better return.

Please do so. I will await for the quote.

Yes i have read the book, plus many many other economic books. I think, over the decades your memory is playing tricks on you.

No. If everyone were to create and stick to their terminology, then the human race will not communicate clearly with each other. We should do our best to follow the dictionary and the original meaning of the word, using the correct semantics.

People do use Bitcoin though.  You've always been a pessimist on this.

according to what definition?

Dollars are an asset, are they not?

Their value is speculated on, is it not?

There's a difference between having an objective, and realizing it. 


Because crypto is mostly a greater-fool game with a delusional grandiose story behind it that can, at first sight, sound exciting and not entirely improbable (replacing fiat / replacing contracts and law / ...).  Like derivatives, but with a nebulous underlying: "the world's payment system", or "the world's legal contractual basis" or something of a kind, rather than a more economically tangible underlying.  Yes, in principle, crypto could do useful things.  Derivatives too.  They are invented to hedge risk.  But most of the time, they are financial gambler's instruments.  Like crypto.  Yes, you can also use it to pay something if you really insist, or to run a smart contract, or to rent disk space, or to have prediction markets, or to reward blogging or .... But that's not what it is principally used for and traded for.  It is used and traded essentially to buy low and sell high ; to be a fool, and find a greater fool.  Sometimes you win, sometimes you lose.  It are essentially gambler's tokens ; like derivatives.

Derivatives are useless. Bitcoin has objective usefulness: to move wealth from A to B across the globe, open 24/7, no borders etc. It has unique features.
The fact that other cryptos exist don't change the fact that bitcoin has the strongest network effect that gives you a peace of mind knowing it will not get delisted the next morning from an exchange, and this will only grow the longer bitcoin is alive.

I don't see how you can put it at the same level of derivatives.

I've read him literally decades ago

But he certainly didn't talk about inflation and deflation of monetary base (as you mean it), but rather about prices of goods and services. It is really hard to misunderstand Hazlitt, he is one of the most coherent and easy to understand authors. But if you continue to insist, I will find his book and quote him to you, though, I think you can easily find him yourself. In any case, this understanding of inflation and deflation is inconsequential since I made it perfectly clear that by inflation I mean depreciation of currency while by deflation, consequently, its appreciation. I guess you will have to stick to my use of terminology since this discussion (about the velocity of money affecting inflation rates) was my invention, after all

Nope. It is medium of exchange, whereas the value slowly goes down every year.

I think you have H H on hoarding, velocity, inflation misunderstood.

Inflation/deflation - increase/decrease in money stock/supply = Inflation/deflation - increase/decrease in bitcoin stock/supply. Bitcoin stock is 21m and the supply is getting lower as bitcoin approach 21m. No inflation but can have deflation via permanent lost bitcoin.

You keep saying this without a basis.

US Dollars are a speculative asset, as is every major currency.

I don't think that deflationary publicity per se has any relevance to Bitcoin rise

In real life things don't work according to some convoluted (or maybe not so convoluted) theory. You are again putting the cart before the horse and now fail to see the forest for trees in addition to that. First, any theory follows the reality, and if someone says that something works along some theory, you shouldn't interpret it literally as if things really cared about any theory (it is no more than a metaphor, really). Further, I never said that the current issues were the cause of Bitcoin speculative use. Basically, I say that the issues we face today prevent Bitcoin from turning into a full-fledged currency competitive with the most advanced and successful fiat currencies out there. You seem to be failing at basic logic here. Metaphorically speaking, the absence of proof is not proof of absence

Yes.


But this is the vicious circle: bitcoin will be handy money, when bitcoin is handy money.  This is a "symmetry breaking" problem, in a way: once you're in one equilibrium (that of fiat), it is essentially impossible to flip to the other equilibrium (that of bitcoin), because there is a huge "mountain of inconvenience to go from one equilibrium to the other one, but on top of that, bitcoin is entirely designed to be deflationary, which is, by itself, a "repulsive" for being used as a currency (you don't want to SPEND something that will grow in value, do you !).


I don't see it as "gold".  I see it as a financial speculative product, like complicated derivatives, that are too complicated to try to have any fundamental analysis of, and just play greater fool games with.  The stuff the financial world is fond of, and has already cupboards full of it, 10 times the world economy.  The kind of thing that exploded in 2008.  This stuff is not under valued or over valued, as it is a speculator's token.

It is zero at t = 0, it will be 0 at t = t_something, and in the mean time, it goes sky high.

Again, the rhetoric judgement of the counter party betrays the weakness of the argument.

It is not the recent technical hurdles of bitcoin that suddenly are the cullprit of bitcoin's mainly speculative use.  Bitcoin's speculative use has been pushed by the explicitly deflationary publicity of it, the fact that there "never will be more than 21 million coins that are going to buy up the whole world" or something of the kind.  

That, plus the fact that there's no real demand for such a payment system, and that *in reality* if you want to use bitcoin to pay for something, you need to use MORE third party services (your bank, an exchange....) than if you were simply paying with fiat.  In those cases where you can easily pay with fiat, bitcoin has nothing to offer as a payment system.  It is only *if you have a good reason not to use fiat or banks* that bitcoin/crypto offers something and dark markets were quick to adopt that for instance.

But now that bitcoin is a speculative asset, there's almost no possibility to revert it to a currency, apart from starting to seriously debase it, which is totally against its belief system.

Of course, you are right that, if hodlers stop hodling and use their coins to buy groceries, this will increase vastly the overall velocity of the currency and have a seriously inflationary effect !  But when hodlers will decide to stop hodling, they will sell for fiat, not for groceries, because until they decide to stop hodling, no incentive will be there to sell groceries for bitcoin.  In fact, this "transition" and this "inflationary pressure" is what people would call "bitcoin crashing".

There is no smooth mechanism in such a system to maintain a stable price.  You get an instability upwards (deflationary spiral) or you get a crash, because it is a speculative asset.  I don't see how one can have a smooth transition from "I'm holding my 10 coins because 8 years from now I'm a millionaire" to "I'll buy groceries with my 10 coins".

You should consider the situation with reference to time

The inflationary effect follows from the changing relationship between the time it takes to produce some good (which remains constant) and the velocity of money (which increases). For an outside observer it looks as if more money is chasing the same amount of goods per unit of time, which causes inflation (producers raise the prices). Henry Hazlitt explains it pretty well in his book (in the part on the dangers of excessive saving, i.e. hoarding), though he considers the opposite situation, i.e. when people stop spending and prefer saving, thereby decreasing the velocity of money (which leads to deflation)

You only see what your eyes want to see

In fact, I thought that my point that was sort of self-evident. Right now, people are not inclined to transact because, first, transaction confirmations are slow and, second, transactions fees are nebulous. Both these factors have a multiplicative effect (i.e. they don't cancel each other but rather intensify). If they are removed, first, people will transact more on their own (fast and cheap transactions), but that's not the major set of consequences (it is only a subset, in your speak). It is often said that there is a vicious circle in Bitcoin, i.e. there are no merchants because there are no buyers while there are no buyers because there are no merchants (or something to that tune, you get the idea). With instant and cheap payments, there will be a beneficial circle. Low fees and faster transactions will certainly lead to more merchants starting to accept Bitcoin, and consequently more buyers (and so on). On another, higher level, the increase in the velocity of Bitcoin would cause lower but more stable prices (since there will effectively be more coins in circulation), and that will also contribute to wider adoption of Bitcoin among merchants. It is now evident as well that you are not an economist by any means (not a good one, at least)

Andy buys bag of apples for £10 from Bob, who then buys bag of onions for £10 from Clare. Velocity is 2.
Clare buys a chair for £10 from Dave = velocity is 3 and so on.
The higher the velocity = higher transactions made.