Topic: Why does Bitcoin subsidize saving? (Read 8618 times)
I will take a look at those. Thanks!
JoelKatz, from where have you learned the economic theory you know? Which book(s) would you recommend to me, that teaches concepts like the one above?
My top recommendations would be Economics in One Lesson (by Henry Hazlitt) and The Road to Serfdom (by Hayek). True. I guess the point is that consumption will happen no matter what; we can't survive without consuming. Investing, however, will not necessarily occur. Therefore one could argue that encouraging investment is more important than encouraging consumption.
Right, but it's important to remember that saving is a form of investment. When you save money, you have invested whatever productivity you contributed in order to get the money you saved. What that productivity produced earns interest in the economy as it makes possible further production.For example, say I work at an auto factory. I help make cars. My productivity produces cars. Say I save some of the money that I earned. I have invested in the form of those cars that I made that otherwise wouldn't get made that are now earning interest as people use those cars to do work and produce goods. My income has been invested in the economy as I save that money and it earns interest because it produces goods that increase the demand for the money I saved. Deflation is the interest my productivity earns.
With a sensible monetary system, saving is a form of investing. Deflation is interest on invested productivity.
JoelKatz, from where have you learned the economic theory you know? Which book(s) would you recommend to me, that teaches concepts like the one above?
Actually there is a situation when it is more profitable to spend Bitcoins than to save them.
That is namely in a *recession*. When the economy shrinks the value of Bitcoins is expected to go down, so it would usually be more profitable to actually spend the Bitcoins in this case than to hoard them.
The interesting thing is that Bitcoin works anticyclical. If the economy grows then the value of Bitcoins grows too thus people are encouraged to save more this means less investment/consumption and thus reduces the growth. In a recession people would tend to spend/invest more thus stimulating the economy and thus ending the recession. Thus Bitcoin would help reduce the extremes of the boom/bust business cycles.
This is the opposite of Fiat currencies which actually worsen or create the boom/bust cycles.
I would claim that in a recession people's demand for money increases, which causes the price of money to increase, and declining prices follow. Actually, I'd almost say that a recession - as we know it - is defined by an increased propensity to save, thus driving prices down. If it weren't for the massive money printing by central banks, dollars and euros would by more now than they would have in 2007. That is namely in a *recession*. When the economy shrinks the value of Bitcoins is expected to go down, so it would usually be more profitable to actually spend the Bitcoins in this case than to hoard them.
The interesting thing is that Bitcoin works anticyclical. If the economy grows then the value of Bitcoins grows too thus people are encouraged to save more this means less investment/consumption and thus reduces the growth. In a recession people would tend to spend/invest more thus stimulating the economy and thus ending the recession. Thus Bitcoin would help reduce the extremes of the boom/bust business cycles.
This is the opposite of Fiat currencies which actually worsen or create the boom/bust cycles.
Yeah.... everybody needs to stop that recession crap now, just admit it already. We've been in a full out depression for years, yet people are so high on their crystal egophetamines that admitting something negative about their homeland is unpatriotic/unamerican and goes against what they've been taught day in and day out by their favorite news stations.
I have no idea if what i just stated has anything to do with the rest of the thread, its just that when i see the word "recession" used by anybody, it makes me want to slam their head up against a plate glass window and sodomize them with their trendy pocket gadgets like ipads/droidx or 2 or what ever theyre calling it these days. Same goes with those that use the letter T in the word alzheimers.... stupid people like this make eugenics sound like a good idea.
I have no idea if what i just stated has anything to do with the rest of the thread, its just that when i see the word "recession" used by anybody, it makes me want to slam their head up against a plate glass window and sodomize them with their trendy pocket gadgets like ipads/droidx or 2 or what ever theyre calling it these days. Same goes with those that use the letter T in the word alzheimers.... stupid people like this make eugenics sound like a good idea.
Actually there is a situation when it is more profitable to spend Bitcoins than to save them.
That is namely in a *recession*. When the economy shrinks the value of Bitcoins is expected to go down, so it would usually be more profitable to actually spend the Bitcoins in this case than to hoard them.
The interesting thing is that Bitcoin works anticyclical. If the economy grows then the value of Bitcoins grows too thus people are encouraged to save more this means less investment/consumption and thus reduces the growth. In a recession people would tend to spend/invest more thus stimulating the economy and thus ending the recession. Thus Bitcoin would help reduce the extremes of the boom/bust business cycles.
This is the opposite of Fiat currencies which actually worsen or create the boom/bust cycles.
That is namely in a *recession*. When the economy shrinks the value of Bitcoins is expected to go down, so it would usually be more profitable to actually spend the Bitcoins in this case than to hoard them.
The interesting thing is that Bitcoin works anticyclical. If the economy grows then the value of Bitcoins grows too thus people are encouraged to save more this means less investment/consumption and thus reduces the growth. In a recession people would tend to spend/invest more thus stimulating the economy and thus ending the recession. Thus Bitcoin would help reduce the extremes of the boom/bust business cycles.
This is the opposite of Fiat currencies which actually worsen or create the boom/bust cycles.
In fact, let me just quote from an article I saw linked elsewhere:
Fantastic read that sounds like the all too familiar preachers around here desperately trying to rationalize the bitcoin economy.
I would also like to point out that maybe, just maybe, if we can advance as a race beyond this ridiculous need to take advantage of each other, perhaps we would invest in things that require lots and lots of labor to improve humanity but require little in the way of actual natural resources. Like investing in new forms of energy, space exploration, pharmaceuticals (away from big pharma), and more.
When you save money, you produce but do not consume. That's great. You deposit but do not withdraw, loaning everyone else use of the benefits of your labor. Deferred consumption should be rewarded as it's a form of investment.
Does the idea of deferred consumption necessarily make economic sense though? I mean, you certainly can't do it with labour - you can't just say, oh, I don't need those 40 hours/week of this person's labour right now, I'll defer using it for a few years. If no-one uses that labour right now it's gone, wasted, poof, and if you need labour in the future you're basically using new resources that would've been there regardless of what you consumed in the past.In fact, let me just quote from an article I saw linked elsewhere:
Quote
By the time I retire, according to government actuarial tables, there are supposed to be two workers supporting each retiree in decades of leisure. There was no financial vehicle that was ever going to make that possible: not the Social Security system, not a gold-plated company pension, not a 401(k), and not a magical money manager promising risk-free returns. And yet whom do we elect? Whose books do we buy? The people who tell us that they can make this impossible thing happen. We’ve become our own three-card monte dealer.
The same argument applies just as well to Bitcoins as it does to any other investment scheme; we're still trading our consumption right now for future consumption that we have no rational reason to believe should be available to us at a reasonable price. Doesn't matter whether the currency is inflationary or deflationary or goes-sidewaysey because the problem isn't with the tokens we use to represent resources, the problem is with the underlying resources themselves. Actually, I suspect this might be even worse with a deflationary currency like Bitcoins.
I meant "fiat money is the answer", not "all money", and I didn't think I needed to clarify that, but in hindsight perhaps I should have. All money can be used to satisfy a debt, sure, but only fiat money is loaned into existence by a bank for the purpose of a specific purchase - from bonds to cars to coffees. There is no naturally found fiat money anywhere in the universe. Fiat money is a loan between a bank and a borrower. Just because you got the money off that borrower, doesn't destroy that loan. All other forms of money are representations of themselves, or of a specific quantity of something in a vault. The fact that everyone predominantly trades fiat money like other forms of money, when all these other commodities still exist to freely trade right now, just goes to show you how cheap and convenient it is in comparison to everything else. That might change, but it needs a good reason to.
While BTC are also not naturally found anywhere in the universe, they still require some competitive "work" to produce, and are thus fundamentally closer to gold than fiat, which is created by tapping a few keys in a central bank. Even fiat requires some work to create, but its cost is orders of magnitude lower.
OK, granted, fiat money, as created, is a debt. It's still not an IOU in the sense you're using. If anything, accepting a dollar is accepting obligation for that debt. While BTC are also not naturally found anywhere in the universe, they still require some competitive "work" to produce, and are thus fundamentally closer to gold than fiat, which is created by tapping a few keys in a central bank. Even fiat requires some work to create, but its cost is orders of magnitude lower.
What I don't see is why you're conflating "cost to create" with "cost to transfer" the cost to create a gold coin is part of it's intrinsic value, not part of the cost of transferring that coin. The cost of trade I spoke of earlier is the effort wasted in getting that coin from one hand to another, or the goods back the other direction. Before the advent of PM coins (gold, silver, sometimes copper) or other means of scarce commodity trade (such as cowrie shells, or salt), all trade was done with barter - back to the chickens again - If I wanted to trade chickens for cows, I'd have to find someone with cows who wanted chickens. With the advent of money - a common item that trades can be denominated in - I need only find someone with money who wants chickens, and then find someone with cows who wants money. Since people who want chickens and have money, and people who want money and have cows are more common than people who want chickens and have cows, money has facilitated that trade. It has made my trade of chickens for cows that much easier.
Saying the $ is volatile and responsible for pm/btc appreciation is only a half truth. If it was completely true, since we *know* the $ always depreciates, how could the price of btc go from $32 to $2 in 6 months? Did the $ deflate that much in that same time period?
Tsk tsk.... I detect a Strawman... I never said the dollar caused the volatility of BTC. Look again what I did say:
Volatility only applies when comparing to another currency. It's not the gold that's volatile, it's the Dollar.
Where's the BTC in there? Answer: It's not. I never said what you want to make it look like I said. And what you want to make it look like I said is much easier for you to defeat. That's the definition of a strawman. Nice try, but I'm smarter than that.
BTC does not get it's value from the hashing, the proof of work, the cryptography, or any of that. BTC gets it's value from the users' desire to own and trade it. (just like gold) The price of BTC fluctuated from $5 to $32 and then back down to $2, because of users' desire - or lack thereof - to use it as money in comparison to the USD.
Of course, industrial demand has no effect on the price of silver. 
Even if it is a marginal difference, it's still non-zero, and that matters.
Even if it is a marginal difference, it's still non-zero, and that matters.Silver is being mined much faster than it is being used up in the industrial uses. Yet it's $ price still increases. It's an inflationary currency, but it's real world value remains nearly constant. In 1961, gas was $0.30 per gallon. Now, if you use silver dimes, it's $0.20. http://inflationdata.com/articles/wp-content/uploads/2012/02/Gas_20_cents.jpg
Sound familiar?
If you can make that distinction, you can make the next. You may be satisfied with "ending up" with gold or bitcoins to finalize a trade, but what of the interim? What if someone doesn't have gold or a bitcoin to give you today, but they will tomorrow, and you want to get your thing off your hands in the mean time? Money is the answer. It is an IOU; a credit; an "I'll pay you with something of value tomorrow, but here's a token which represents that today". Fiat banks and money deal in the facility of time lagged trade, not the goods or services themselves.
Then that's a loan, not "money." Gold is money, Bitcoin is money, gold or other commodity-backed currency is money, I'll even allow that fiat is money, albeit only backed by your trust in the issuer. But fiat is not an IOU for anything. Accepting fiat is not accepting an IOU for something later, it's accepting that the issuer won't ruin the exchange value of the fiat by printing up more.I meant "fiat money is the answer", not "all money", and I didn't think I needed to clarify that, but in hindsight perhaps I should have. All money can be used to satisfy a debt, sure, but only fiat money is loaned into existence by a bank for the purpose of a specific purchase - from bonds to cars to coffees. There is no naturally found fiat money anywhere in the universe. Fiat money is a loan between a bank and a borrower. Just because you got the money off that borrower, doesn't destroy that loan. All other forms of money are representations of themselves, or of a specific quantity of something in a vault. The fact that everyone predominantly trades fiat money like other forms of money, when all these other commodities still exist to freely trade right now, just goes to show you how cheap and convenient it is in comparison to everything else. That might change, but it needs a good reason to.
While BTC are also not naturally found anywhere in the universe, they still require some competitive "work" to produce, and are thus fundamentally closer to gold than fiat, which is created by tapping a few keys in a central bank. Even fiat requires some work to create, but its cost is orders of magnitude lower.
I agree, that fiat will always have a lower value than anything of inherent value. That doesn't necessarily make it a better facilitator of trade. Using gold, or silver, or BTC for trade doesn't mean that you're "paying for" the inherent value, but that what you are paying for is worth more than the inherent value, whether that is the labor of a worker, or a hamburger. And gold is not volatile at all. Neither is silver. Volatility only applies when comparing to another currency. It's not the gold that's volatile, it's the Dollar.
PMs have industrial use, and even if it's marginal it's still a non-zero cost. If demand skyrockets tomorrow because of a new discovery (or any other reason), those using gold as a trade token suddenly benefit by "momentarily" having it, and those temporarily without it are at a sudden disadvantage, and the same is true in reverse...not in the ongoing trade, but in the time lagged trade. Every moment that you do or don't have gold you're risking usage volatility and trade volatility...the same thing any business looking to trade in BTC faces today. Think you're getting $10 by selling for 1btc today, and only get $9 when you cash out tomorrow does not make for a happy owner. You can make the cashout instantaneous to avoid this, but B2B transactions, which happen over months, will prefer the currency that provides stability over months. You can conduct trade however you want, but people will naturally flock to the cheapest.
Fiat will never have any such "new use" discovery, and you only ever risk trade volatility. QE is a new spin on the same old idea.
Like fiat, Bitcoins don't really have an industrial use, but they still deride their holding value via some difficult competitive work to create, and that plus it's actual trade token value gives it an exchange of around $10/coin. Do you think 100% of the BTC price is because people are buying it because it's sooooo much better to buy their coffees with than fiat? If not 100%, how much? When big business cares about a 0.01% increase in profit, when will BTCs have a lower running risk than fiat?
Saying the $ is volatile and responsible for pm/btc appreciation is only a half truth. If it was completely true, since we *know* the $ always depreciates, how could the price of btc go from $32 to $2 in 6 months? Did the $ deflate that much in that same time period?
If McDonalds accept both fiat and silver for a burger, are you telling me that you'd seriously trade appreciating silver than any spare depreciating fiat you have? I don't think so. If you want to use PMs in a trade, that's all well and good, but you no longer have a need to facilitate trade, and no need for a currency either. You're simply bartering. Fiat money satisfies a need which bartering simply cannot.
The only people who are seriously going to use BTC "only" are those for whom fiat is otherwise unacceptable or draws unwanted attention...for whom the cost of BTC is outweighed by its benefits.
If McDonalds started taking silver, I'd get the fuck out of fiat as fast as possible. That would be a sure sign of the the end. Again, silver doesn't appreciate, the dollar depreciates.The only people who are seriously going to use BTC "only" are those for whom fiat is otherwise unacceptable or draws unwanted attention...for whom the cost of BTC is outweighed by its benefits.
Of course, industrial demand has no effect on the price of silver.
Even if it is a marginal difference, it's still non-zero, and that matters.I was referring to "store of value" as "settle immediately", and "facilitator of trade" as "settle at a later date". The two ideals are mutually exclusive, because you cannot both settle now and at a later date also.
Well, here, at least, we finally agree. You cannot both settle a debt now and settle that debt at a later date. Thankfully, not even fiat claims to be an attempt to settle debt at a later date. So your definition of "facilitator of trade" is false.
The debt that is to be settled with fiat, is the one in which an entity promised to pay back fiat to a bank (plus interest) in return for creating the fiat for a loan they wanted to take. They have to figure out a way to get the fiat they gave you, back off you, or go bankrupt.
...Gold and bitcoins are the items of value that are traded. They have inherent value due to scarcity or usage or whatever.
No way. Gold, Bitcoin, and fiat are ALL money because they have significant value above industrial/direct-use value, and they can all facilitate trade. They certainly vary quite a bit in terms of various properties (ease of transacting, ease of storing, time-preference for holding, etc), but they're all money. The "inherent value" you reference is the same for all; it comes from scarcity (real or perceived) for all three, combined with trust that other people will still value it in the future.
Fiat money is the only one without any and which will never have any industrial value, except for bitcoins. Something like 97% of fiat money is digital now, too, so it can't even be used for toilet paper any more. Bitcoins share this advantage with money, but are currently too inconvenient for fast transactions.
Fiat money satisfies a need which bartering simply cannot.
The world used gold and silver for quite some time before fiat came to dominate. That was not barter.
The need is for legitimized and standardized credit. I don't think many civilizations actually worked on a bartering system at all. Perhaps in the ancient days when you were unlikely to see someone ever again, but there was evidence that all civilizations had a currency with a trivial placeholder.
The only people who are seriously going to use BTC "only" are those for whom fiat is otherwise unacceptable or draws unwanted attention...for whom the cost of BTC is outweighed by its benefits.
Bitcoin is great for modern transactions. Obviously it's impractical to use *only* bitcoin without more places accepting it, but one of its best properties is ease of transaction.
It won't replace fiat unless it's cheaper. Being novel does not make it "great". More places won't accept it unless they make more money from doing so.
Fiat money satisfies a need which bartering simply cannot.
The world used gold and silver for quite some time before fiat came to dominate. That was not barter.
Well, under a very loose definition of "barter", yes, it was (and still is). But commodity money is still money.
Under the same loose definition of "barter", that would also apply to fiat (slips of paper in trade for goods). :-)
Sounds silly, but the key point is that gold, bitcoin, and fiat all derive the vast majority of their value from their monetary purpose. Strip away monetary purpose, and for gold you have some industrial use (maybe 1/8th of current value); for fiat, you can burn it and whatnot; and for bitcoin, you've got some public/private key pairs and an indisputable time-log of when people did what with them. Point being, none of the above are very interesting without the monetary purpose; thus, all are money.
/thread.
Fiat money satisfies a need which bartering simply cannot.
The world used gold and silver for quite some time before fiat came to dominate. That was not barter.
Well, under a very loose definition of "barter", yes, it was (and still is). But commodity money is still money.
Under the same loose definition of "barter", that would also apply to fiat (slips of paper in trade for goods). :-)
Sounds silly, but the key point is that gold, bitcoin, and fiat all derive the vast majority of their value from their monetary purpose. Strip away monetary purpose, and for gold you have some industrial use (maybe 1/8th of current value); for fiat, you can burn it and whatnot; and for bitcoin, you've got some public/private key pairs and an indisputable time-log of when people did what with them. Point being, none of the above are very interesting without the monetary purpose; thus, all are money.
Fiat money satisfies a need which bartering simply cannot.
The world used gold and silver for quite some time before fiat came to dominate. That was not barter.
Well, under a very loose definition of "barter", yes, it was (and still is). But commodity money is still money.
...Gold and bitcoins are the items of value that are traded. They have inherent value due to scarcity or usage or whatever.
No way. Gold, Bitcoin, and fiat are ALL money because they have significant value above industrial/direct-use value, and they can all facilitate trade. They certainly vary quite a bit in terms of various properties (ease of transacting, ease of storing, time-preference for holding, etc), but they're all money. The "inherent value" you reference is the same for all; it comes from scarcity (real or perceived) for all three, combined with trust that other people will still value it in the future.
Fiat money satisfies a need which bartering simply cannot.
The world used gold and silver for quite some time before fiat came to dominate. That was not barter.
The only people who are seriously going to use BTC "only" are those for whom fiat is otherwise unacceptable or draws unwanted attention...for whom the cost of BTC is outweighed by its benefits.
Bitcoin is great for modern transactions. Obviously it's impractical to use *only* bitcoin without more places accepting it, but one of its best properties is ease of transaction.
If you can make that distinction, you can make the next. You may be satisfied with "ending up" with gold or bitcoins to finalize a trade, but what of the interim? What if someone doesn't have gold or a bitcoin to give you today, but they will tomorrow, and you want to get your thing off your hands in the mean time? Money is the answer. It is an IOU; a credit; an "I'll pay you with something of value tomorrow, but here's a token which represents that today". Fiat banks and money deal in the facility of time lagged trade, not the goods or services themselves.
Then that's a loan, not "money." Gold is money, Bitcoin is money, gold or other commodity-backed currency is money, I'll even allow that fiat is money, albeit only backed by your trust in the issuer. But fiat is not an IOU for anything. Accepting fiat is not accepting an IOU for something later, it's accepting that the issuer won't ruin the exchange value of the fiat by printing up more.Gold and bitcoins are the items of value that are traded. They have inherent value due to scarcity or usage or whatever. Fiat is much cheaper to deal with, regarding volatility, because it has no value except as a trade token. It's only use is to represent giving something of value to someone else, but not yet getting a return on it. If you try to use gold or btc as a facilitator of trade, you will be paying not only it's value as a trade token, but also its varying value as a scarce commodity. Fiat, which is worthless in every other way, will always be cheaper than anything of inherent value.
I agree, that fiat will always have a lower value than anything of inherent value. That doesn't necessarily make it a better facilitator of trade. Using gold, or silver, or BTC for trade doesn't mean that you're "paying for" the inherent value, but that what you are paying for is worth more than the inherent value, whether that is the labor of a worker, or a hamburger. And gold is not volatile at all. Neither is silver. Volatility only applies when comparing to another currency. It's not the gold that's volatile, it's the Dollar.If McDonalds accept both fiat and silver for a burger, are you telling me that you'd seriously trade appreciating silver than any spare depreciating fiat you have? I don't think so. If you want to use PMs in a trade, that's all well and good, but you no longer have a need to facilitate trade, and no need for a currency either. You're simply bartering. Fiat money satisfies a need which bartering simply cannot.
The only people who are seriously going to use BTC "only" are those for whom fiat is otherwise unacceptable or draws unwanted attention...for whom the cost of BTC is outweighed by its benefits.
If McDonalds started taking silver, I'd get the fuck out of fiat as fast as possible. That would be a sure sign of the the end. Again, silver doesn't appreciate, the dollar depreciates.The only people who are seriously going to use BTC "only" are those for whom fiat is otherwise unacceptable or draws unwanted attention...for whom the cost of BTC is outweighed by its benefits.
So when I said:
It depends what you want that currency to be used for.
Store of value or a facilitator of trade?
The two ideals are indelibly mutually exclusive.
I was referring to "store of value" as "settle immediately", and "facilitator of trade" as "settle at a later date". The two ideals are mutually exclusive, because you cannot both settle now and at a later date also.
Isn't currency better spent than saved and hoarded?
It depends what you want that currency to be used for.
Store of value or a facilitator of trade?
The two ideals are indelibly mutually exclusive.
I was referring to "store of value" as "settle immediately", and "facilitator of trade" as "settle at a later date". The two ideals are mutually exclusive, because you cannot both settle now and at a later date also.
Well, here, at least, we finally agree. You cannot both settle a debt now and settle that debt at a later date. Thankfully, not even fiat claims to be an attempt to settle debt at a later date. So your definition of "facilitator of trade" is false.
So you'll wait around for an hour each time you want to buy a coffee, will you? Why don't you use gold backed currency now? Or do you? Who buys lots of chicken every day? As a facilitator of trade, practicality is paramount.
Bitcoin is a horrible currency for in-person transactions, unless you're willing to accept 0-confirmation transactions. The main reason I don't use a metal or metal-backed currency right now is the same reason I don't spend a lot of Bitcoins: because none of the people I do business with in everyday life don't accept it. When McDonalds starts accepting silver for their burgers, I'll be on that like white on rice. As to the chickens, I was making (an apparently failed) reference to barter. Gold beats barter, and for internet business, Bitcoins blow gold out of the water. (Ever try to email a gold coin?)
If you can make that distinction, you can make the next. You may be satisfied with "ending up" with gold or bitcoins to finalize a trade, but what of the interim? What if someone doesn't have gold or a bitcoin to give you today, but they will tomorrow, and you want to get your thing off your hands in the mean time? Money is the answer. It is an IOU; a credit; an "I'll pay you with something of value tomorrow, but here's a token which represents that today". Fiat banks and money deal in the facility of time lagged trade, not the goods or services themselves.
Gold and bitcoins are the items of value that are traded. They have inherent value due to scarcity or usage or whatever. Fiat is much cheaper to deal with, regarding volatility, because it has no value except as a trade token. It's only use is to represent giving something of value to someone else, but not yet getting a return on it. If you try to use gold or btc as a facilitator of trade, you will be paying not only it's value as a trade token, but also its varying value as a scarce commodity. Fiat, which is worthless in every other way, will always be cheaper than anything of inherent value.
If McDonalds accept both fiat and silver for a burger, are you telling me that you'd seriously trade appreciating silver than any spare depreciating fiat you have? I don't think so. If you want to use PMs in a trade, that's all well and good, but you no longer have a need to facilitate trade, and no need for a currency either. You're simply bartering. Fiat money satisfies a need which bartering simply cannot.
The only people who are seriously going to use BTC "only" are those for whom fiat is otherwise unacceptable or draws unwanted attention...for whom the cost of BTC is outweighed by its benefits.
So when I said:
Isn't currency better spent than saved and hoarded?
It depends what you want that currency to be used for.
Store of value or a facilitator of trade?
The two ideals are indelibly mutually exclusive.
I was referring to "store of value" as "settle immediately", and "facilitator of trade" as "settle at a later date". The two ideals are mutually exclusive, because you cannot both settle now and at a later date also.
So you'll wait around for an hour each time you want to buy a coffee, will you? Why don't you use gold backed currency now? Or do you? Who buys lots of chicken every day? As a facilitator of trade, practicality is paramount.
Bitcoin is a horrible currency for in-person transactions, unless you're willing to accept 0-confirmation transactions. The main reason I don't use a metal or metal-backed currency right now is the same reason I don't spend a lot of Bitcoins: because none of the people I do business with in everyday life don't accept it. When McDonalds starts accepting silver for their burgers, I'll be on that like white on rice. As to the chickens, I was making (an apparently failed) reference to barter. Gold beats barter, and for internet business, Bitcoins blow gold out of the water. (Ever try to email a gold coin?)
Isn't currency better spent than saved and hoarded?
It depends what you want that currency to be used for.
Store of value or a facilitator of trade?
The two ideals are indelibly mutually exclusive.
Um.... No.
Gold is both, and performs each service admirably.
Gold can be saved indefinitely without losing value, and is a hell of a lot easier to transport than the number of chickens it can buy.
Bitcoin improves on both: It can be stored indefinitely without losing value, and all things being equal, will probably increase in value; and it is infinitely easier to transport than even the amount of gold it can buy.
Trade is maximized when the cost of trade is minimized. Bitcoin takes that cost down as much as possible.
So you'll wait around for an hour each time you want to buy a coffee, will you? Why don't you use gold backed currency now? Or do you? Who buys lots of chicken every day? As a facilitator of trade, practicality is paramount.
The cost of a $ is far less than the cost of a btc, for everyday purchases, and the only way to make bitcoins work as effectively as fiat in this regard, is to remove one of the very things that make btc/gold what they are.
Explain to me how non-productive capital pursues innovation or accelerates the rate of growth in the economy. Or are we just going to say that capital sitting in a wallet accruing deflationary interest at little to no risk is productive again? Innovative, even?
Guns don't kill people. People kill people.
Money doesn't invest, innovate, or produce. People invest, innovate, and produce.
Savings provide capital to those who earn it. Banks provide capital to those who beg for it.
Investment is a boon to an economy. Malinvestment is a burden.
Isn't currency better spent than saved and hoarded?
It depends what you want that currency to be used for.
Store of value or a facilitator of trade?
The two ideals are indelibly mutually exclusive.
Um.... No.
Gold is both, and performs each service admirably.
Gold can be saved indefinitely without losing value, and is a hell of a lot easier to transport than the number of chickens it can buy.
Bitcoin improves on both: It can be stored indefinitely without losing value, and all things being equal, will probably increase in value; and it is infinitely easier to transport than even the amount of gold it can buy.
Trade is maximized when the cost of trade is minimized. Bitcoin takes that cost down as much as possible.
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