Exactly, too many people confuse investment (store of value) part of a currency with fungibility (medium of exchange) and debt (standard of deferred payment). Being good at one or even two of these things doesn't necessarily make it good at all three, good currencies balance all three to a greater or lesser degree.
> Exactly, too many people confuse investment (store of value) (...)
The "store of value" trait of money has nothing to do with the investment angle. It literally means value you store. It's the assurance that it retains it's value so to allow you to use it in the future to purchase something just like you could do today.
If the value of your coin only goes up in value, why would you use 1 bitcoin now to buy a pizza slice if you can use it 5-10 years from now to buy a house?
That's exactly the problem: People will (rationally!) limit their spending to bare necessities if they expect the currency they have on hand to strongly appreciate over time.
Imagine that, having the option of saving your money for things you really want instead of being forced to spend it on things you don't, or risk lending it out for essentially free to compensate for the continuous fall in value.
There are other ways to encourage spending though, like a wealth tax. Not that I necessarily support it, but that would be the more comprehensive solution to hoarding, since it couldn't be worked around by just exchanging fiat for other assets like gold.
Sure, my point was that there are many reasons someone might spend money today that might be better off saved for the future, however much it may increase in value.
I think crypto proponents in general share this inability to understand the fact that one of the most basic traits of money is stability of it's value, and anything that fails to meet this basic requirement is simply useless as a currency.
Bitcoiners understand it well. They realise that in order to stabilise in value and become a unit of account, it has to grow close to it's ultimate potential as a store of value first. Which in the case of bitcoin is potentially well over $100T market cap.
This is why El Salvador is likely willing to back down in the currency aspect for now and focus onto accumulating and holding bitcoin reserves.
deflation is fine for an economy. inflation is disastrous for an economy. the people in charge of the money printers are trying to keep you confused. don’t buy it.
Not arguing too hard but people do have to spend some money to live regardless… it could be said people are less careful with their money when they feel like it’s losing value, so they spend more and save less. Yes it results in more spending but on what?
I'm not trying to strawman the opposing side, but I always found it ironic that many of the cryptocurrency proponents I talk to think that starting a business is amazing and innovation is important, but also hate inflation, which encourages those two things.
> Not arguing too hard but people do have to spend some money to live regardless…
This isn't about a decision to buy bread and milk for your breakfast. It's about the decision on whether you invest in a grocery store vs let your money sit in a bank. If doing nothing is more profitable than doing something then society as a whole will gravitate towards generating no economic activity. This has disastrous consequences because the majority of people in a society do not have the luxury of having investments to live off their dividends.
> If doing nothing is more profitable than doing something then society as a whole will gravitate towards generating no economic activity.
You're operating off a false premise. Do you think all economic activity would be less profitable than the interest rate offered by deflation?
The whole point of investing in any business is to make a return. Giving businesses competition in the form of deflationary currencies will not eradicate businesses from being formed, and there's no evidence to suggest these businesses will be less profitable than holding a deflationary currency.
We see this in various cryptocurrencies claiming to be deflationary with the concept of 'yield', which shows investing to be a function of their wealth, interest, and expectation of return. Inflation does not need to be in the equation for this type of development.
That 'LOL' comes across as very arrogant for someone who seems to have a tentative grasp at best on what they're commenting on. We have already experienced stagflation which runs counter to a lot of Keynesian ideas about inflation. It turns out it doesn't always encourage spending and employment. Similarly there is no evidence deflation will lead to stagnation of productivity[1]. People will always want to spend more than is needed for survival and doing so in a deflationary environment makes people think harder on how money is spent.
computers have experienced rapid deflation in the previous decades. did that prevent people from buying computers? no, obviously not.
of course you are just trolling ("LOL") and you are incurious to any evidence or argument that contradicts your straight-from-cable-news talking points.
This isn't quite the same. Money that is deflating becomes literally more functionally useful the longer you hold it. Computers stay as functionally useful as you hold them and arguably degrade relative to the software you need to run on them. In your analogy you should be concerned with whether I want to sell my computer (analogous to spending my money). If a computer truly did become more functional with passing time then no, nobody would sell them unless they had to - illustrating the problem.
you're technically correct, yes it isn't exactly the same. good job! for an example that is exactly the same, look at the general monetary deflation in the united states during the majority of the 19th century. I know most people won't, so I used a similar example that everyone is familiar with.
Their argument isn't that it's not "exactly the same" (they were being polite), it's that it's functionally the opposite. And when you imagine a variation in which it's functionally the same, your argument clearly falls apart.
As far as deflation in the 1800s, are you referring to in 1818 after a credit collapse cratered England's economy and then spread to the US and put it into a recession; or maybe the Panic of 1837 which triggered a depression until the mid 1840s?; or do you mean the Panic of 1873 which triggered the Long Depression that lasted until 1899?
Which one of those are good examples we should look to?
The glorious periods of deflation that you're glamorizing are referred to in the historical record as panics and depressions. Because they were very unenjoyable.
It's of course not that bankers put this spin on it to give them an excuse to continuously print money (all the money in fact) out of thin air and charge interest on it.
Remind me, why is the target inflation rate 2-3% again? It couldn't be that it's the amount of money creation they can get away with without devaluing the currency so much that it destabilises into hyperinflation could it?
I'm just having fun - I'm sure I'm completely wrong
> Remind me, why is the target inflation rate 2-3% again?
Because empirically it seems to yield a pretty sustainable mixture of consumption, investment, and savings, while also not risking a wage-price spiral.
You tell me what the target inflation rate should be and point to some moments in history informing that target so I can go read about them.
It should be a negative, just as the value of consumables are over time. But that's not possible in a system heavily indebted and addicted to interest rates under the free market rate (only possible because banks create money effortlessly and hold it artificially low to enable a monopoly on "debt").
Such a policy would quickly collapse the current system as the value of the debt would increase over time instead of decrease, and so instead the banks inflate the value of the currency down to 0 which takes more time for the system to collapse (which fiat currencies always do and always will).
Starting again with a hard money, we would thrive, instead of being enslaved by a system that continuously stealthily, steals the value out of the fruits of our labour (at a rate of ~7% year) and gives it to the bankers and those closest to them.
Who cares? The "economy" is just people buying and selling things. If they choose not to and save instead, that's great. It's called freedom.
It's like saying - "if we have some money that keeps going up in value, we won't need to work anymore and unemployment figures will go up - that's terrible - we must not allow it to happen!"
Right, you'll spend the absolute bare minimum and proactively invest approximately never.
This is bad.
In fact, you'll only ever invest in highly speculative investments because they're the only things that might possibly justify the opportunity cost of your currency just accruing value.
By people in change of money printer, did you mean Giancarlo Devacini, who has printed hundred billion funny tokens in some non-extradition offshore with zero audit, and used those funny tokens to buy other tokens like BTC, ETH and others? Those people? Or he is fine, because you are directly benefiting from that token printer and doesn't care about others being swindled in the process?
Yeah, i really dislike bitcoin, but have to admit, it has been a very profitable investment for a lot of people (and still hasn't completely crashed like expected)...
... although as a form of currency (as opposed to an investment) for El Salvador, it looks like it's a failure
The risk that IMF would be concerned about is that the value of their holdings could go to 0 overnight by a wallet hack, data loss, an unscrupulous government employee, or the world running out of greater fools.
Yeah, that's my theory too on one reason it hasn't fully crashed (meaning "the world running out of greater fools"). Unlike tulip bulbs or the dot.com crash, bitcoin is a world-wide phenomenon so there is large supply of bitcoin buyers. Yeah, even the dot.com crash was done in the highly regulated US stock market.
Also thinking, since it's extremely difficult to regulate, was wondering if some very clever people with huge holdings have formed a cartel and are doing a lot of price manipulation to prevent it from fully collapsing (maybe even during a rise in price, causing it to drop early to prevent a major run up). But that's just a theory.
That is not a currency in the same manner that gold isn't a currency or barrels of oil isn't either. Or in other words, you don't use for buying a coffee or grocery.
Sure that you can always point some exotic and rare exceptions to prove differently but even yourself don't use it on normal daily financial operations, and no, Lightning isn't even bitcoin so please don't argue with that.
There are more things backing up the value rise for that old tech. Just please diversify into other areas so you don't come out empty handed in some years from now.
>I dont know what the future hodls but it’s looking pretty good for bitcoin so far
The future always looks good right before a crash. You really don't want a currency as unstable as bitcoin as your legal ledger. we would have had 2 crashes already in this decade alone: the obvious 2020 dip and the dip in 2023.
All the DOGE/Trump shennaigans + the investigation on the Hawk Tuah coin will probably crash it again late this year.
I don't think DOGE/Trump are real bitcoin advocates. I think they're using it as a financial weapon to exploit its vulnerability to crash and break things they don't want to exist.
