Comment by jasmer | Hacker News Reader

Comment by jasmer | Hacker News Reader

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There is no such thing as a 'stable price'. That's the rub.

I think what you mean is 'stable next to some other asset'. Like USD.

Ok, but if they are marked to USD, and you want them to be marked to USD, you have to do a lot of manipulation to keep them well marked ... it's basically an extension of USD! You are amplifying the power of fiat!

But if you don't want to be 'tied' to USD, well, who is going to sell their goods in USD, and then constantly be re-pricing in BTC? Nobody. The answer at the corner store is: "if you want to use BTC to buy milk then convert them to USD first and buy the dam milk".

Businesses in Canada used to keep USD on hand for USD visitors just as a matter of pragmatism, because cash is a pain, but if you can flip back and forth now without a lot of transaction cost, then we don't need that.

So there's no point really in using BTC as a 'currency' because everyone is going to rationally adopt the currency of the local economy for purposes of 'stability'.

If they don't want to hold dollars, then put their money in a choice of other assets.

When they need to interact with another economy, they need the currency for that economy and so they need to trade for those foreign dollars.

There's just no way around it and I don't think that BTC has any role to play in it.

You know that there are people in the world that don't use dollar as their local currency on a daily basis, right? So 90% of the world already have to think about how their assets are being priced in dollars while still using their local currency. But I do agree that volatility is partly an artificial problem, because once you start pricing things in BTC, it will immediately stop being so volatile.

My gosh man, everyone lives somewhere where there is a 'local currency' and that local currency exists for good reason.

If everyone in the world switched to BTC it would be a catastrophe worse than COVID. If you live outside of the US, your salary would fluctuate around like an elastic band.

If everyone used BTC and magically the transaction rate weren't constrained to make that impractical, wouldn't the fluctuations be much smoother? If everyone was using BTC as their primary currency then the basket of goods it buys would basically be the world goods. That would smooth out fluctuations quite a bit.

Kind of a fun thought experiment. I suppose you could reason similarly about it if you just imagined plain old fiat US Dollar is fixed in cap and printed directly to whatever analog of a "miner" would be.

My armchair guess is that disaster wouldn't necessarily be around price fluctuations of goods, but rather the perpetual deflationary nature of the currency.

If there was a fixed supply of currency the deflationary thing would be #1 problem.

Otherwise, the issue is the loss of regional monetary supply controls.

People do not like their salaries changing in nominal terms - that causes riots, but salaries are fluxuating vis-a-vis other national markets you just don't see it, because it's 'hidden' behind currency fluxuations.

Having everyone change their salaries and pricing all the time dramatically because of international issues is bad. It's easier to have regional economies have their own currencies, and to smooth out fluxuations between economies vis-a-vis central bank.

And of course, major actors would cause all sorts of problems.

The notion of a global currency is completely insane - neat thought experiment, but probably a total disaster.

The people who are behind most Crypto generally have utterly no understanding of what money is, and this is a primary problem with crypto.

"Oh, there is a dollar, I can make a digital thing and also call it a dollar!"

Yeah, no.

It's why most of the financial world is befuddled with crypto - because they are looking at tech people driving cars off of a cliff by burning 2% of the world's electricity supply. It's just economic populism.

Very well put!

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