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Comment by JamisonM | Hacker News Reader

This is true, but the definition of "really want" changes if everything you can buy is subject to deflation in your currency of choice. If you believe Bitcoin will keep rising you will defer every expense until the last possible second and many transactions you will defer and later find that you do not need to engage in them, thus there is less commerce ongoing. How does a rational consumer justify going out for dinner on Friday if on Sunday they expect the date to be 15% cheaper, and Tuesday to be 20% cheaper, and so on? It is like the pain of finally biting the bullet and buying a new computer in the 90's knowing it will be cheaper in 3 weeks, but on every transaction you make.

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This explains succinctly why almost no computers were sold in the 1990s.

No, it explains succinctly why almost anything that does not offer the amazing value proposition of a 1990's computer (in the 1990's) would see its sales volumes plummet. That threshold is not met by the vast majority of durable goods. This is why it is a problem.

Yet people still bought computers knowing full well they are going to be cheaper in a couple of months. Why? Because they needed them. Same thing with Bitcoin. Of course, you won't be buying stupid stuff you really don't need. And you know what, that's a very good thing for the economy, because it will make people very responsible when it comes to buying things and investing their money. Bitcoin is an ultimate cure for consumerism and excessive spending. Economy as a whole and people in it don't really profit from investing into useless hole digging, even though it may look good on the paper.

Honest question, what do people "need" Bitcoin for that cash or other payment systems can't do? The only unique advantages I see are those that are illegal in many jurisdictions and those that are related to speculation. The number of people who need currency for illegal activities plus those who speculate in currencies is finite and not a significant portion of the population, so I'm just not seeing how regular people are going to derive any use from Bitcoin that couldn't be achieved by other means.

Liquid store of value. USD is liquid, but inflationary. Gold is a good store of value, but you can't really spend it like you can spend Bitcoin.

That is actually /not/ very good for the economy at all. If you abruptly reduce spending to the absolute minimum, sure it sounds very idealistic, but you're grinding most economic activity to a halt, causing hundreds of millions of layoffs, and minimizing the job market.

I estimate that we'd have about 60-70% unemployment, and no jobs for those people to go to because, well, other people just aren't spending any money.

The second half of the 19th century the US was in deflation, yet economy boomed and unemployment wasn't high at all.

Deflation != hyperdeflation

I do not necessarily accept the premise that consumerism is necessarily good or bad but I do not find the argument that a currency that discourages economic interaction is a good thing very compelling. I do not think that having someone else prepare a meal for you in the evening, lets say, once a week is "useless hole digging" but and honest exchange of services for money. Drastically changing the dynamic of such interactions seems like a pretty wild economic experiment, not one to be taken lightly.

When spending within the economy is restricted in this way by market forces value will concentrate very highly in essential goods and infrastructure and attracting rent-seekers to those areas of investment. The net result, it seems to me, is casting off the tyranny of fiat currency for a new kind of tyranny. The same kind that lead to the trust-busting era in US politics.

But even electronics do not change value on a daily/weekly basis. And when it does, like pending the release of a new iphone, people do stop buying them.

Yet people do not buy bitcoins because they need them. They buy them in the hope that the valuation increases (or buy one or two for sports).

Otherwise, what can you buy with bitcoins that you can't buy with dollars?

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