Cryptocurrency is still a misunderstood concept for many ppl in the financial world. As use and integration increases, btc will likely stabilise. Meanwhile, we get interesting volatility.
- being deflationary is not a feature, it's a bug. An inflationary currency incentivises you to invest it, otherwise you lose real purchasing power. With a deflationary currency, you can just stuff it anywhere and see gains. You steal from tomorrow. As the material wealth of the world increases, our money supply should increase to match. AFAIK there isn't any popular crypto that can easily adjust how many tokens are mined each year.
- almost every crypto's transaction throughput is ~4 orders of magnitude below what Amex/Mastercard/Visa can process.
- most of the ease of using crypto is only because it bypasses AML/KYC laws. Venmo and Zelle would be far more convenient otherwise.
I can't see it as anything other than speculation.
You don't understand the WHY of those gains.
A deflationary environment is the only real environment, that is why central banks are set up to fight deflation, because deflation is the natural order of things.
And in that real environment, gains in productivity are only possible because of savings, people invest not because of fear, the investments takes place because people truly believe the business proposals will produce VALUE, and hence REAL GAINS, which necessitates that people be not drowning in debt. That is why an inflationary system is a bubble system, it cannot be sustained on its own. It is a perpetual motion machine, or tries to be anyways.
Society has made a lot of progress, but the price has been an unprecedented amount of debt. In essence, we've mortgage the future, and at some point those bills will be paid either by will of by force.
This happens because the poor continue to transact hand to mouth and are unable to save while the wealthy accreted value on their idle cash. Invested cash creates economic activity. The cash in your mattress does not. The opposite is true in a deflationary environment.
Debt in an inflationary environment benefits the debtor, as the loans are denominated in the dollars at the time of loan issuance. To the extent that the economy grows faster than your debt load you do not in fact ever have to pay it off.
That is nonsense. Sadly by repeating it enough people have started to actually believe it, and repeat it without looking at the evidence of the real world.
A cheap pair of jeans, adjusted for inflation was ~$150 in 1980. Now you can get one for $10. Did no one wore jeans for 40 years? Meat, it has never been so cheap IN HISTORY to buy meat, and if the trend continues, next year you could buy even more meat with the same money! (adjusting for inflation of course) Are you not gonna eat for a year?
That is not even talking about tech, were a cheap laptop 20 years ago adjusted for inflation was over $1000 and now is $300.
People prefer things now not later, that is why if you offer them $50 today instead of $100 in 10 $10 monthly payments most people pick the $50. The same thing happens when buying stuff. Sadly evidence is not as marketable as propaganda.
So as I said, nonsense.
I mean you can just do the simple mathematics. Suppose there are 100 utility units of wealth in the world - machinery, homes, anything tangible to improve lives - and 100 units of currency to match. Through human labour we produce another 100 utility units. Now each unit of currency can provide me 2 utility units. This is just a system that rewards wealth more than work, even more so than our current system.
Let's look at capital flows. Why in the world would I ever loan to a small business if I could see gains just by holding the money? Why would I ever give companies money in IPOs? There is much less of an incentive to direct capital to those who can be the most productive with it.
That is why things get cheaper all the time, yes.
> Why in the world would I ever loan to a small business if I could see gains just by holding the money?
The same reason you do now, which is the only reason you ever lend money: by lending it (to someone more productive than yourself of course) you gain more.
No, you repeated propaganda that told you to think you did, but as with the rest of your “points”, too many lols very little substance.
> that’s what happens when technology increases productivity.
Not when, technology ALWAYS increases productivity, that is the point of technology. Deflation is inevitable because productivity increases are inevitable.
And the poor have benefitted immensely from deflation, despite central banks doing everything they can to rob you of its benefits. More people than ever can now afford to eat meat, or drink single malt scotch, or whatever. More people eat lobster now than in any other time in history, that is the power and benefit of deflation.
> Not when, technology ALWAYS increases productivity, that is the point of technology.
Well, not bitcoin lol, it's anti-efficient.
Any deflationary nature is a council level imposition on an otherwise pretty neutral asset class.
> the price of real estate in the US has not changed.
That's just ludicrous.
> By that definition Bitcoin is a neutral asset class as well since it's deflationary nature is also artificially imposed.
Deflationary is not neutral, it’s deflationary. That’s an artificial imposition of directionality. Further that’s only in isolation. Once you consider the economy expanding and contracting around it, externalities, shocks and the addition and removal of market participants - and loss of coins - its claim to neutrality is like that of a baby fighting Muhammad Ali. It requires positive control to match market conditions. It’s only neutral if you pretend the rest of the world and the economy don’t exist.
[1] https://www.google.com/amp/s/fee.org/articles/new-homes-toda...
Normally, real estate markets are tracked in isolation.
We don't take home values from the Detroit market, Beverly Hills market and San Antonio market to price a house in New York.
Real estate is deflationary because each asset is unique - like fine art or a 1 in millions baseball card misprint.
Not home prices, but the trend in home prices. I think we do, that's why the BLS is tracking this number. I don't work in the industry though, so I can't say for sure.
> Real estate is deflationary because each asset is unique - like fine art or a 1 in millions baseball card misprint.
Respectfully I disagree. Real estate is only deflationary if you're looking at the square footage on the ground alone, but if you can build up a practically unlimited amount (and we really, really can) then it's not a relevant thing to look at. Each square foot on the ground turns into more and more square feet of real estate over time as you build higher and higher.
And those at higher locations will be more costly because they'd be both desirable and scarce.
If your theory were true all homes would be priced on some square footage price constant. They're not.
USD dollar hasn't seen intense inflation recently. Or a kleptocratic government like most of the world.
That said there are large issues using it as a payment mechanism due to volatility in USD.
Still not convinced that is a good thing. It perpetuates a cycle that rewards people who already have excess income to "invest" and keep making more money. Meanwhile those without any significant income to invest are left even further in the dust.
I'm not arguing for crypto at all here- just commenting specifically on that inflationary point.
We already know what happens when people aren't incentivised to invest - it's called a recession.
Who said 5% sitting on money? I'm talking about a situation where there is basically no real inflation or deflation. $100 is $100. You can still choose to take your money and invest it if you want, but you aren't forced to GAMBLE your money (you can use the word invest all you want, but 99% of the time it's simply gambling).
>How many fewer tech giants and unicorns would we see?
So first of all, you are completely butchering what I said per above.. but in any case, maybe that's a good thing not to see all the tech giants and unicorns? People are so obsessed with doing things so they can "make it big" it's really just sad. HN in particular, I see it all the time here. All most people seem to care about is trying to make the most money possible and less about things that are actual helpful.
Greed is a hell of a drug.
>We already know what happens when people aren't incentivized to invest - it's called a recession.
That is quite a stretch. You will always have people that want to gamble their money. My point is you should not be FORCED to gamble your money to play the game the rich people who set the rules want you to.
[1] https://bitinfocharts.com/comparison/bitcoin-fee_to_reward.h...
[2] https://www.cs.princeton.edu/~arvindn/publications/mining_CC...
Rather than an attempt at designing a currency with really desirable properties, it seems like intent behind bitcoin was to take the WORST aspects of currency: scarcity, extreme volatility, unground it from reality, and computerize all that to make it even faster and more reckless.
Economic crashes devaste the working class when inflation skyrockets or goes into manic up-down bulimic cycles that seem to benefit only financiers. ... Yet this is what people have made as a _CENTRAL_ feature of cryptocurrency?
Bitcoin/crypto-currency makes me question even the most fundamental notions of what money "is". Whatever it becomes, I wish that crypto-currency was just a way to exchange goods and services with some useful features rather than a thrill-toy for wealthy speculators. I guess that would be too boring for people?