What currency is stable in value? Certainly not the U.S. dollar.
The reality is, Bitcoin and similar, are not being used to actually purchase things. Not at any notable percentage. You're "best bet" is to horde it, and that doesn't make a good currency.
But most of the comments are about how stable currency and stores of wealth are actually bad! It kind of sounds like we think bitcoin is working.
If USD is inflating and Gold is staying still, is gold “deflating”?
but then starved to death while hodling?
I don't personally believe this will ever happen. BTC has too much legacy cruft. The "digital gold" narrative won out. Day-to-day transactions will happen in a newer, perhaps not invented yet crypto.
Why would anyone sell? Well at some point in your life you want to use the money to accomplish your life goals
This is time value of money. If I wait 20 years instead of buying a house, I can have more money. But that’s 20 years of my life I didn’t live in the house I wanted.
I could invest more in S&P and not go on vacation, but then I won’t have as much time to go on vacations.
Goods and services now can be more valuable than money later, and that’s why people sell. And that’s why deflationary currency is fine.
If you’re asking if people would not use their deflating currency to buy lattes and sneakers, I disagree. People like sneakers and lattes more than money. They prove this everyday by buying them instead of s&p.
There is an issue of the cost of a transaction - which nis bad for btc and s&p. Nobody wants a tax form for buying a pizza. But the regulatory environment creating high selling costs is orthogonal to the deflationary property.
The argument simply is that exchange should be frictionless and deflationary currency will slow the velocity of money. I guess you agree this will lead to reduced prosperity and economic activity, though you call it frivolous purchases. Your comment about preferences doesn’t play into it; this is about mechanics of exchange, and a precious asset is an inefficient medium for commerce which would lead to reduced economic activity because not only do you have to factor in the opportunity cost of buying a good or buying some other good (sneakers or s&p), now you also have hodling, zero economic activity, as a 3rd option with its own expected return and opportunity cost to forgo. When I buy sneakers, the s&p 500, or btc, my dollars don’t disappear. A counterparty receives them and they stay in the economy. If you pay me in btc and I just hold it, then that money effectively does disappear from the economy.
And I’m not even mentioning all the macro issues of not being able to provide liquidity in the form of new capital in times of crisis.
I’m advocating for stable currency. Not bitcoin.
> you agree this will lead to reduced prosperity
I agree that it will reduce the velocity of money and maybe “GDP”. But not prosperity, individuals being able to save wealth into the future is a better life outcome than more goods changing hands.
> and a precious asset is an inefficient medium for commerce
You are conflating liquidity with deflation. To be a currency it has to be liquid, we agree. We also agree btc is not as liquid as cash. But deflation or stability is orthogonal from liquidity.
> now you also have hodling, zero economic activity,
Already addressed. People want money to buy goods.
> my dollars don’t disappear.
The value isn’t lost in the exchange but it’s lost everyday due to inflation. And by “lost” I mean transferred to government projects.
> that money effectively does disappear from the economy.
No it merely is saved for a future consumption date. If we average consumption needs of participants in the economy there is no reason to expect a monotonic hoarding effect. That would mean consumers are not satisfying their desires for goods.
Here is one last framing. The economy is not money, it’s goods and services. Money is just a tool for claiming them. So what does an inflationary currency do to help the economy? Does it cause more people to get out of bed and create new goods and services? No. It just transfers claims to resources to someone else.
I’m not; you have a limited view of what inefficiency means. The currency can be liquid and still inefficient for exchange due to other kinds of overhead such as opportunity cost of spending the currency itself.
The economy is not money but a frictionless (opportunity cost wise NOT liquidity wise as you keep trying to divert to) currency is better for facilitating exchange and access to goods and services.
I think a perfectly stable currency could be OK too but that would require incredible management on the monetary side to maintain that equilibrium. And absent being able to hit that bullseye it’s been proven, as much as things like this can be, that a stable little bit of inflation with a fiat currency is much stabler and leads to more prosperity than a currency bound by finite resources external to the economy.
Isn’t it enough that you can buy gold or whatever or bitcoin with your depreciating dollars? Why the fixation on it being a currency?
A true economy of low friction btc transactions for pizza has never existed at the scale banks do pay wave. Its hypothetical frictionless, not actual. I'm willing to bet even legalised state coins will be tracked, frictive and taxed.
You lost me at stable currency. BTC is a speculative asset. Gold is a speculative asset. Neither are stable currencies.
If you'd like to speculate and INVEST in BTC, go ahead. But I'm quite frankly tired of people claiming it to be a currency.
You have little assurance that the buying power of $10 today will be the buying power of $10 tomorrow. If the tariffs had gone through as initially advertised, that would certainly not have been the case.
So there's an implicit question there which apparently you and everyone else missed.
Remember that guy who spent 100BTC on a pizza? It’s a funny story but that’s why nobody uses Bitcoin for normal transactions.
Hint: cause and effect. You did miss the point and still do probably.
Oh I'm sorry, that was your shtick. Apologies!
Also, I'm not a crypto person, I made some gains and sold a long time ago. I just have to laugh that you think one pointing out that an argument is weak makes one a part of the opposite tribe.
I didn't even specify if I thought you were pro or anti crypto - I just find that most conversations around crypto are dominated by statements of "the other side of this just doesn't understand basic facts like I do" instead of actually stating what the facts are and how they apply to the situation that would help someone learn what's being discussed.
I may very well be the stupid one here, and you may be quite a bit smarter than me, but I don't know because I still don't know the point you're hinting at making.