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Comment by Retric | Hacker News Reader

Just the reverse, you discourage adoption by turning a currency into an investment.

If bitcoins had constant or decreasing value through time then people would be more willing to trade them. This is why deflation is so economically dangerous.

It did encourage mining, but that doesn’t driving long term adoption and has nearly purely negative consequences.

The ideal long term strategy for adoption would have mining to provide a consistent reward in real terms over a long timeframe, low costs and high transaction volumes, and for unused accounts to be charged a small fee. Bitcoin failed all of those which is why it’s never had significant adoption as a currency.

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> Bitcoin failed all of those which is why it’s never had significant adoption as a currency.

Yet there is no more successful digital currency on the planet. If you think you can make one with "better" rules please go ahead!

> This is why deflation is so economically dangerous.

The idea that inflation and constant spending are the only thing that makes an economy work is faith-based, and bitcoin was intentionally not started that way. So far I'd say it has worked quite well.

> is faith based

Back when people used precious metals for currency many different economies would all be tied to the same shifts in value. I don’t know all the details but there’s real world support for significant deflation being detrimental not just theory.

That said trivial levels of deflation aren’t harmful, but bitcoin had very extreme deflation.

Bitcoin has inflation at the moment.

> I don’t know all the details but there’s real world support for significant deflation being detrimental not just theory.

The problem is that the "real world support" is usually taken from fiat money economies that are entirely built on inflation, and for historical examples there usually was an economic crisis at the same time that was accompanied by deflation. It's hardly conclusive.

High levels of inflation are also harmful. +/- ~0.3% per month is fine, outside of that range and you’re hurting adoption.

> an economic crisis at the time

In non fiat currencies you also get deflation from economic growth. Where you can study the effect is when the growth occurs outside of a given economy. Again, outside of my expertise it’s just something I have read.

It's a very good store of value/gold analog and a not so great currency.

That's fine though - if you have something that holds value you can move it into whatever currency exists when you need to do that.

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