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Comment by weichi | Hacker News Reader

"If a 30 year old puts a days wages into an account and can expect a days wages out when he's 80 years old then he can drastically simplify his retirement."

Your idea here seems to be that bitcoin could help you not only hedge against "inflation", but also against rising economic productivity. I.e., what a saver really wants is some kind of guarantee that at age 80 they will be able to consume the same fraction of economic output that they were able to at age 30. Could you spell out how bitcoin helps solve this problem?

(I take it for granted that hedging purely against inflation is actually a solved problem, because you can just invest in short term bonds, which provide excellent hedges against inflation. But of course they don't help at all with rising productivity).

Edit: Another - massive! - issue with retirement savings is longevity risk. How can you ensure that you won't run out of savings before you die? Bitcoin won't help you here.

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Bitcoin solves that problem by being finite. Since scientific advances are cumulative and directly impact worker productivity, it is reasonable to assume that a stable currency that does not inflate will at least preserve purchasing power.

Investing in short term bonds is not only not riskless (lots of governments and corporations have either defaulted or written down their debt), but often times do not even match inflation.

Saving as a logevity risk: Yes. You don't know how long you will live, we could very well develop medicine that would keep me as a functioning senior until I'm 100 years old. But against all other alternative forms of saving, if bitcoin was a world-currency it would be the safest way to assure purchasing power.

How big a problem is it that bitcoins are finite ? The minimum unit of a bitcoin today is a satoshi, there can ever be max about 2200000000000000 satoshi. Is 2200000000000000 units of currency going to be enough to run a global economy ?

Finite being no-inflation. There is actually no technical limitation from stopping the subdivision of bitcoins.

One way money becomes less valuable is because demand for goods and services increases. So there can be Bitcoin inflation without an increase in the BTC supply.

Obviously if a comet is hitting the earth a month from now the relative demand shifts from dollars to Viagra, but we're speaking in term relative to dollars. Since the supply of Bitcoins is not increasing after it hits 21 million, there is no reason to suspect inflation.

Bitcoins isn't going to preserve your purchasing power contrary to your claims even if it preserves it more than USD.

how the f is it reasonable to assume that it will preserve purchasing power, based on the assumption that it will be stable?

I can set up a chain of assumptions about the dollar based on actual historical precedence & Bitcoiners will whine & whine but because Bitcoin is "so pure" or something you think it's safe to chain a set of dependent assumptions together & say "This is how its goin down"?

Basic supply and demand theory. When supply goes up, price falls. Since Bitcoin's supply does not go up after a certain point, all other things being equal it will preserve purchasing power vs the USD.

but why would demand remain constant? In Bitcoin, a buyer & seller are needed in order to exchange. The idea of demand remaining constant only really holds true in a scenario where Bitcoin is the 1 world currency, and even then there are fluctuations in population and productivity.

I get that you're saying all other things being equal but that doesn't really float in a real-world simulator.

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