Topic: Why Bitcoin is not that good as currency? - page 16. (Read 2195 times)

I am not able to understand what you are saying. I am saying that this cannot be possible even with passage of time due to a simple reason that BTC cannot be used as a mainstream currency.
Exactly gold and silver weren't cancelled out to be used as money because of inconvenience but because of its limited supply. Because gold pegged currency were the same as using gold as a currency so that system didn't involve us carrying gold all the time with us. But this system was changed because government didn't have power to control the supply of money in the economy. Leading to some big deflationary gaps. Now same is the problem with Bitcoin today.

It's pretty much the same with gold that people can't print out of thin air, and despite it is being praised as money (ignoring how inconvenient it is), the fact that it is something people hoard makes it by definition bad money.

I don't think we'll ever get to experience a Bitcoin or gold standard anymore. Money has to have the inflationary characteristic so that it isn't scarce enough to endlessly hoard, which is something fiat does right.

I rather keep hoarding Bitcoin than spending it and there isn't much that will be able to change my mind. Even if fiat as we know it implodes, the government will issue a new form of money. Bitcoin and gold will still be ignored in that case.

of course i know exactly what u talking about.
but well, its need a long time to make it happen.
and as a time goes by people have a fear of loss of money because the stupid news everywhere,even total btc still same amount.
like many many speculation, btc will go to rich people at the end.

I have heard a lot of people having a misconception regarding the fact the inflationary currency are bad for economy because they are based on debt and nothing else to back them. Moreover the currency is losing it's power of the course of time. While Bitcoin will gain it's value over the course of time due to it's limited supply. Infact I have seen this pretty popular picture regarding the comparison between both



So now, let me tell you how inflationary currency works as per the KEYNES THEORY which is the best theory until now to explain the Macroeconomic Structure. I will explain everything in layman language the definitions have a lot of things which I would skip so I don't make things complex Basically everything what we need daily to satisfy our needs constitutes Demand and resources available to fulfill our needs is supply. At Macroeconomic level these are Aggregate Demand and Aggregate Supply.

Now, humans create an aggregate demand in the economy and look for products while the producers capture the demand by creating Aggregate supply. The supply they create leads to sale and exchange of currency happens. now they hold resources/ currency once held by their buyers. Now the producers are themselves consumers too(Business owners are humans). So more will be the demand more will be the earnings for suppliers who would in turn distribute it into the hands of stakeholders who would further create new aggregate demand higher than before because they have new money to spend. This would never stop as demand for goods increases so people tend to buy goods now to be safe from inflation. This New money comes from Government who injects additional supply of money to maintain a level of economic growth and fulfill budgetary deficit.

Now coming to simple things, Producers need more money to do production. This excess money is actually fed by the government into the economy. Now with every increase in supply demand is increasing too but not at that rapid scale because population growth is finite. So this excess printing of money is necessary for economic development as money in economy increases the demand in the economy.

In case of deflationary currency such as Bitcoin, as we are giving our aggregate demand at current price levels. Or in layman terms we are buying at certain price level. Say for example( a completely hypothetical situation), Wheat . You can buy 1kg of wheat for 1 bitcoin today. Now imagine that we grow in our economy and it leads to better production of wheat due to increased efficiency in production. Now we would have more wheat to sell. However, the supply would increase and demand will not because people still have the same 21 million bitcoin in circulation. So now we will have more wheat and the prices would go down and down. But in such case people will begin to hoard money. The will not spend their bitcoin in anticipation of it prices declining tomorrow. This would lead to even more deflation as demand would decrease even further. Thus creating a spiral which we often call the deflationary Spiral. I think this is why thinking bitcoin as a mainstream currency could pose a lot of problems for all of us.

PS: Supply of goods( Aggregate Supply) and supply of money are separate things
  Demand of money and demand of goods( Aggregate Demand) are two separate things

Do you agree or refute?