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Comment by bawolff | Hacker News Reader

I know you are being snarky, but i think its worth pointing out that ever increasing prices is bad for a medium of exchange not good. The higher prices decreases the liklihood of it being used like a currency.

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It seems implausible that its price will increase forever. If your concern is that a bitcoin is an inconveniently large unit of value, like a kilogram of gold, you can subdivide it into individual satoshis even on the public blockchain, and at the current price of roughly US$100k per bitcoin, a satoshi is roughly a tenth of a penny, which seems adequately subdivisible to me. If Bitcoin improbably ended up at US$10M per bitcoin, it would still be a dime, which is probably still okay.

It's not the parent comment's concern (at all).

It's pretty unclear what that comment was talking about, and your comment doesn't help.

Not involved in the posts above but I'll explain.

I own bitcoin. If it only ever increases in value, I'd have to be a complete idiot to spend it, when I have depreciating fiat to spend.

Yes, absolutely. But that’s exactly the problem. What is crypto - currency, investment, technology, religion? Apparently for all the crypto people I know, it’s somehow all of the above.

Its a thing you buy that will go up in value as Trump, Elon, JD Vance, and RFK Jr. enter power.

Its about that simple now. Whether or not that's good for the country (IE: does anything useful) is irrelevant now.

When Bitcoin was conceived economists said it would have built-in deflation and it seems they were right

No economist said that. Deflation refers to the behaviour of the price level. As such it isn't a property that assets can have.

The original intent of bitcoin was to be a currency so that's how it was evaluated. The point of this thread is that despite it's increasing popularity it has never functioned as a currency. Calling it an asset is dubious since it carries no equity nor pays a dividend nor is it tied to the performance of any institution. That's why I say commodity since it trades most akin to gold although gold (like most commodities) can actually be physically used for things.

The first step in the growth of any medium of exchange is to prove itself as a stable store of value. Otherwise it can't be used as a unit of account. And the first step in proving itself a stable store of value, is to begin storing value which is where bitcoin is at right now.

How does an asset prove itself to be a capable store of value? I say the first condition is that it must have a stable (non-speculative) demand, which bitcoin notoriously lacks, and can never have because it doesn't do anything. It doesn't exist physically, therefore it can't be consumed or used as raw material. And as a financial asset it's nobody's liability, so like an IOU that promises to pay nothing. In conclusion, bitcoin's market value is driven 100% by a speculative demand and that's not a basis for a reliable store of value.

There's two prerequisites:

a) it has to have the fundamental properties of a good store of value

b) it requires the time it takes for most people in the world to realise this (or at least simply accept that it is a good store of value, based on the price history)

Bitcoin has far better fundamental store-of-value properties than any other asset the world has ever seen. Now we bitcoiners are just waiting for the rest of you to catch up. As you do you will store your wealth in it too, increasing the price. While it's growing like this, it experiences volatility as all growing assets do - it's called "price discovery". The waves get shallower and shallower the bigger it grows. It has the potential to store the majority of the value in the world.

To say it has no use is a big mistake to make. Possibly the biggest in your life depending on how long it takes for you to realise. It took me 10 years and cost me millions.

Incorrect - the term inflation is rooted in the inflation of a money supply, which leads to devaluation of the monetary unit and therefore a rise in prices.

Bitcoin is deflationary as at some point in the future the total supply will decrease each year (through people dying with their money etc.)

by that logic people would not buy TVs or memory cards

Errr, by their logic people wouldn't use TVs or memory cards as "cash". Which they don't.

TVs and memory cards keep getting cheaper, not more expensive.

yes, that is what deflation is

The deflation of a currency is when the currency gets more expensive, not cheaper. It's true that other goods get cheaper when measured in that currency. But what we're discussing here is whether, and how, the continued deflation of Bitcoin discourages its use as a medium of exchange, not whether some hypothetical deflation of the dollar would discourage the use of other goods such as memory cards and Bitcoin as a medium of exchange.

>The deflation of a currency is when the currency gets more expensive, not cheaper.

This is a perversion of the economic definition of inflation and deflation.

Inflation is the rate of change of prices.

These are two different ways of looking at the same thing, but the crucial issue here is the direction of inflation: inflation is when prices, measured in the currency in question, go up, not down. That is to say, the value of the currency, measured in terms of any given good, goes down, not up. jsbg was getting this backwards, and your comment isn't helpful in clarifying their confused thinking.

Historically speaking, the "printing too much paper money" definition of "inflation", which is more or less what you're saying is "a perversion of the economic definition of inflation", preceded the "general increase in prices" definition you're talking about: https://en.wikipedia.org/wiki/Inflation#Classical_economics

Deflation is a fall in the general price level. A fall in the price of some goods or of a particular good is not deflation.

My logic is not that people won't but memory cards, but that they won't replace usd as a medium of exchange.

As far as i am aware nobody uses memory cards as a medium of exchange so looks like my logic holds.

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