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Comment by AnIrishDuck | Hacker News Reader

> The first country that wises up to bitcoin, starts investing in mining and other bitcoin infrastructure in a big way, and legitimises its mainstream usage as a currency, is going to reap tremendous benefits.

Like what? Being tied to a deflationary currency? Being unable to influence their own monetary supply? Tying the buying power of its citizens to the computational ability to hash numbers really quickly?

Seriously, what benefits possibly favor this approach over creation of an e-currency that the central bank has control over?

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Tying the buying power of its citizens to the computational ability to hash numbers really quickly?

I'm not sure how those two things are related. Mining is an entirely optional activity for users of Bitcoin, and indeed, the vast majority of users never have nor ever will mine.

They do not have to do it to be influenced by it. The exchange rate of BTC is always going to be tied to mining activity, and hence hashing speeds.

You've got it reversed. Mining activity will be tied to the exchange rate. Total mining rewards (denominated in BTC) are constant no matter how many miners there are, so the higher the exchange rate, the more people mine as it becomes profitable for them to do so. Mining is a zero sum game.

In addition to what tlrobinson said, you only need a small threshold of hash power for a cryptocurrency to function. More hash power reduces susceptibility to 51% attacks for those coins that are at risk for it (including Bitcoin), but it does not impact the functionality of the coin in any practical way.

Governments choose and maintain currencies with low, stable inflation because it's good for the economy and the people at large. Individuals choose currencies with stable supplies to maintain the value of their wealth.

In nations where cryptocurrencies aren't outlawed, they will prosper, and those governments will have to figure out how to manage an economy with a popular deflationary currency.

> Governments choose and maintain currencies with low, stable inflation because it's good for the economy and the people at large.

Yes.

> Individuals choose currencies with stable supplies to maintain the value of their wealth.

Individuals are far wiser to invest the majority of their wealth instead of keeping it bundled up in any commodity that has no inherent value. This includes bitcoins, dollars, yen, tulips, pog caps, and gold. Arguably gold has more inherent value than anything else on that list, but again tying capital up in nonproductive activities (commodities) is not only a poor investment, it makes no larger economic sense.

> In nations where cryptocurrencies aren't outlawed, they will prosper, and those governments will have to figure out how to manage an economy with a popular deflationary currency.

This is an argument advanced without any support. Not all cryptocurrencies are deflationary. And no proof is offered that deflationary currency has any advantages whatsoever. Only hand-wavy "citizens prefer stable supply" is advanced, and I'd argue that the majority of citizens that know what they're doing prefer to invest in productive activities anyway.

Sure, investing makes tons of sense, but does that mean checking and savings accounts shouldn't exist? Individuals are better off with the bank accounts denominated in a currency with a fixed supply. That's so clearly true to me that I don't understand why you disagree.

A widely adopted currency with a fixed supply will slowly increase in value as the demand to perform transactions in that currency increases. The whole point of central bank currencies is to make sure the value slowly decreases over time. Sure, it's good for the economy, but individuals don't make choices based on what's good for the economy. They look out for number one.

"Not all cryptocurrencies are deflationary."

Inflationary cryptocurrencies will not succeed. Imagine there was no dominant currency in your country today. You gave goods or services to someone, and in return, they give you a choice of payment in two currencies: one with an increasing supply and one with a fixed supply. Which would you choose?

"You gave goods or services to someone, and in return, they give you a choice of payment in two currencies: one with an increasing supply and one with a fixed supply. Which would you choose?"

Other things being equal you choose the fixed supply, but other things are rarely equal. For one thing, why aren't they going to price in the expected future change in value?

> central bank has control over

One benefit, out of a multitude, is the removal of the centralized control of the banks. Done correctly, decentralized control is predictable, transparent, and trustworthy.

The protection of the rights of its citizens, which is the right thing to do, and which results in economic prosperity. What's needed is someone who is long-term greedy, because this is the best way to enable wealth in a country. Who wants to be a Founding Father of the next United States? Who has more power, the leader of a free and prosperous nation, or the ruler of a starving dictatorship?

I'm not saying that Bitcoin is the answer, but that there are awesome reasons why an ambitious country should give its citizens their economic rights.

What rights in particular?

Property rights; the right to gain, keep, and use material values, like money, based on the right to life. That's taken away when a country controls currency.

Why would a state choose to give up this control though? It's not often that governments concede previously held abilities.

They would have to understand the principle of rights, and that it benefits them (by any good standard) in the long term.

In other words, they'd have to know that giving up control would be good for them long-term, and they'd have to want good things for themselves.

Lots of states have already given up this control, for a variety of reasons.

How does fiat currency remove the right to have things?

It removes the right to have certain things, such as, money that is in your control.

How is non-fiat currency more in your control.

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