I don't get the idea of "investing in cryptocurrencies". If they are ever to be used as currency they should be relatively stable and predictable. The current status of extreme deflation makes any serious use almost impossible.
Blasted thing from the outset emulated gold, thus attracting "survivalists" and other goldbugs from across the world.
And that is perhaps why Wall Street is moving in, because those companies are at their core built around siphoning the arbitrage on shuffling commodities around.
And with cryptocurrencies they have an ample supply of such commodities, until the earth boils from waste computing heat.
Perverse incentives to the Nth. The paperclip maximizers are already upon us, and they didn't come from the AI lab, they came from the trading floor.
The fixed coin payouts per block, the halving every four years, and the eventual final and finite fixed supply, combined with arbitrary blocksize limits means bitcoin was always designed to hit its limits at 2014 transaction volume.
I traded btc back then for the novelty and bought stuff with it in physical and digital to say I did, but even then the architecture promoted hoarding over spending, and anyone using bitcoin as a currency then is likely lamenting the things they traded it for now which is just about rule 0 of how to make a dysfunctional money.
The crpytocurrency that is actually a currency is one that can use its design to promote its practicality as money - the goal should be no fees, instant signature ledgers that don't consume power on national scales, and an adaptive but predictable algorithm for money creation that can respond to the market to try to keep the currency stable - when transaction volume and coin turnover are high the currency is inflating so you want to reduce minting to try to curtail the effect. When money slows down and starts squatting in wallets you turn up printing to drive deflation.
Anything else in my mind at this point is just a cash grab using the proven mechanisms of bitcoin and an out of control hype train to rob people.
This in that the supposed "good" money is money that incentivize hoarding, while "bad" money supposedly incentivize spending.
The use of good and bad is loaded to put it mildly, and plant a bias in the reader.
Perhaps such complex, chaotic systems may be better off sans regulation. Especially something like cryptocurrency, which does not have the same properties as paper fiat, although it is being treated as such.
I personally have less faith in institutions run by humans and bogged down by dated regulations than I do in an instantaneously fluctuating near free market. If you can't trust people to invest in currency because of complexity, what makes you think you can trust them to regulate your money, and make decisions that affect the value of your assets for you?
In a deflationary environment, one need only hold currency or inert commodities in order to have greater future purchasing power.
In an inflationary environment, it is everyone, holders-of-capital included, who must continuously work to preserve purchasing power.
Inflation encourages malinvestment. There's always a motivation to invest and earn money from selecting profitable ventures. Inflation forces people to be less selective.
> In a deflationary environment, one need only hold currency or inert commodities in order to have greater future purchasing power.
This is only true if you ignore taxation. The government is perfectly free to tax people's wealth if they feel hoarding has become problematic.
>In an inflationary environment, it is everyone, holders-of-capital included, who must continuously work to preserve purchasing power.
Nonsense. People with money always find a way to escape inflation. Take a look at real estate.
Carry this thought experiment a few steps further. What will people buy every day, despite this currency appreciation effect?
I think you meant to say significant deflation is bad. But so is significant inflation. Deflation is actual good in many ways -- worker's wages are worth more, their savings are worth more, and consumption is reduced (whereas inflation can encourage wasteful consumption).
The US is in desperate need of deflation today. Productivity has decoupled from wages -- deflation would make those wages worth more to narrow the gap. Houses have become unaffordable -- impossible to even save a down payment -- deflation will make young people's savings valuable enough to afford that down payment.
Inflation is the snake oil sold to us to benefit the elite at the expense of everyone else.