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Comment by vyrotek | Hacker News Reader

There's no incentive to purchase something with BitCoin if the value continues to go up. Would you spend $5 on a sandwich knowing that by the end of the day if you don't spend you may have $10 instead? BitCoin is not a currency. It's a commodity or "virtual good". The speculation around BitCoin will be its undoing.

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That's a flawed argument, because you can by the sandwich for $5 worth of BTCs, and then immediately buy the BTCs back with cash.

Of course, that seems excessive for the individual user, which is why your wallet service provider will do it on your behalf and assume the risk. I imagine Coinbase will do this very soon.

Assuming that in a couple of years there will be a functioning derivatives market, the wallet service provider can then offload that risk to investors.

Speculation isn't a "bad thing", it's a natural thing that is necessary for an efficient market.

Your logic is bewildering. In your scenario, you're still essentially transacting in USD and using BTC as an investment or a store of value. You're not actually spending BTC, since you expect the value to continue rising, and you buy back the BTC. Another way of looking at it is that there's no exchange of goods in BTC, since the BTC you sell doesn't transfer to a merchant, but to another investor.

Either way, this implies BTC doesn't have intrinsic worth. The OP's argument stands: deflationary forces make it even harder to create a market in bitcoin since no one wants to trade an asset that they think will appreciate in value.

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