Scheitern von Bitcoin durch Deflation unvermeidbar?
Scheitern von Bitcoin durch Deflation unvermeidbar?
Deflation von Bitcoin - Die Unbestechlichen
Bitcoin and Deflation :: Deflation.com
Bitcoin Is Deflationary, Transparent, and Antifragile ...
Einführung in die Blockwirtschaftslehre: Die Deflation ...
Bitcoin - The Currency of the Internet
A community dedicated to Bitcoin, the currency of the Internet. Bitcoin is a distributed, worldwide, decentralized digital money. Bitcoins are issued and managed without any central authority whatsoever: there is no government, company, or bank in charge of Bitcoin. You might be interested in Bitcoin if you like cryptography, distributed peer-to-peer systems, or economics. A large percentage of Bitcoin enthusiasts are libertarians, though people of all political philosophies are welcome.
For those of us who know that the days of fiat currencies are numbered and that some blockchain-based crypto(s) will be the dominant store of value, we must begin recalibrating our minds to a deflationary economy. This is no easy task. Assume for a moment that Bitcoin has been adopted as the primary, worldwide store of value. Given that the number of Bitcoins is finite, elasticity for an expanding economy is achieved not through adding more and more Bitcoins (as mentioned, the number of Bitcoin is finite), but rather through fractional expansion, which is infinite. The rub becomes conducting financial transactions where a given Bitcoin increases in value whenever someone transfers their value from some other store of value to Bitcoin. So if you are an employee with a salary designated in Bitcoin, say 20 Bitcoins a year, as Bitcoin reaches maturity the amount of value that your 20 Bitcoins salary represents goes up, up, up. As does the expense your employer incurs, as they they are now required to hand over more value to obtain Bitcoins. The oblivious solution to this problem is to base the payment of salaries (and other things) on the transfer of value instead of the transfer of Bitcoins (but still using Bitcoin as the medium). But this creates a new problem... how to effectively measure value. This is no easy task. The concept of reducing the quantity of a store of value (e.g., Bitcoin) transferred in exchange for the exact same product or service is called deflation. And this will be the biggest obstacle to the general adoption of Bitcoin. Imagine your an employee doing a spectacular job. But instead of getting regular raises you get regular decreases in your salary. Conceptually, you may still be receiving an increase in value transferred from your employer, but most people do not think in conceptual terms and would struggle to understand if they are really getting a fair deal. This problem is solvable, but it will have to be effectively addressed. Note: the severity of this particular issue dissipates as Bitcoin reaches maturity.
My grandparents emailed me an article in The Atlantic this morning: http://www.theatlantic.com/business/archive/2013/12/why-bitcoin-will-never-be-a-currency-in-2-charts/282364/ It's another attempt to demonstrate that bitcoin = deflation = fail. Here's my response to them... Hey Grandparents, This is what's known as the "deflationary spiral" argument, and has been hurled at Bitcoin advocates since Bitcoin's inception. The argument is that when people expect their money to be worth more tomorrow, they won't spend it today. On the surface, it makes sense. In reality, it's at best entirely exaggerated, and at worst a complete fallacy. The deflationary spiral argument has been used by inflationistas (people who believe in endless money printing to achieve prosperity) to justify their horrible central planning and monetary debasement. It is the main argument economists use to denounce gold as money (because gold isn't produced at the same rate as economic growth, thus meaning the value of gold may appreciate relative to goods - similar to Bitcoin). Of course, the fact that 19th century America was on a gold standard and saw its strongest period of wealth creation and economic growth ever hasn't seemed to bother gold's detractors. Fortunately, now that Bitcoin exists, and exhibits not just deflationary tendencies but MASSIVE deflationary tendencies (it's up 10,000% this year, etc), we have an amazing real world laboratory to see if the deflationary spiral truly is as terrible as alleged. From what I've seen in Bitcoinland, we can debunk it as a myth. People absolutely spend, even when they think the money will be worth more tomorrow. They may spend less... but that is not a bad thing. It means they spend only on the things they really want, instead of rampant consumption. It makes buyers think twice before buying. This is wise and prudent. It encourages saving, and discourages consumption. Indeed in my own experience, I buy things with Bitcoin all the time... and I KNOW it will be worth more in the future. Am I a fool? Or do I merely realize that money is not wealth - that its only value is in exchanging for real wealth. I need to eat. I need a home. I need a car and clothes and some entertainment. These things are wealth, and so I trade bitcoins for them. I'm just more prudent in how I do it. Detractors would claim that when people are prudent with their own finances, that this is bad for the economy. I believe the opposite - when people are imprudent with finances, that is when the economy suffers. Of course, imprudence means exaggerated spending today, which boosts GDP figures (because GDP is just a measure of spending). This seems to have tricked most modern economists into thinking that consumption is the cause of economic growth. I disagree. Consumption doesn't drive an economy - it is the result of the economy. Consumption is the reward for production and savings. Besides... if the deflationary spiral was actually a dire runaway phenomenon, then are the detractors saying that Bitcoin will rise in price forever? If so, why aren't they buying some? And if they aren't sure that it will rise forever, then this defeats their argument, because once it is no longer rising, people would be happy to spend it, thus correcting the deflation problem. Examined carefully, one should realize that to the extent the deflationary spiral exists, it is a self-correcting phenomenon (as are most pricing issues in an open market). And for a final anecdotal nail in the coffin... last year on Bitcoin Black Friday, BitPay (the largest merchant processor for Bitcoin payments) processed 99 orders globally. This year on Bitcoin Black Friday, despite the fact that Bitcoin rose from $13 to $1000, BitPay processed 6,296 orders globally. I have not seen evidence that "deflation" is hampering growth... in fact, quite the opposite. -Erik BitPay article: http://www.washingtonpost.com/blogs/the-switch/wp/2013/12/02/black-friday-set-a-record-for-bitcoin-commerce-bitpay-says/
Bitcoin, Deflation and the End of Top-Down Consumerism
I had a "shower thought" the other day about bitcoin while doing some gardening and thought I'd run it by you folks and maybe get some discussion going. I'm going to try and flesh out my original train of thought in a few paragraphs so this could get long, but feel free to skip to the TL;DR below if you're short on time. There seems to still be a lot of hand-wringing among both critics and supporters of bitcoin regarding the currency's deflationary nature. I don't want to re-hash all the related arguments here in detail as they have already been well articulated elsewhere, but suffice it to say many observers of the bitcoin space, especially classically-trained economists, are eager to pronounce doom for the future of bitcoin as a currency because it does not have the "desirable" property of being inflationary. Why is an inflationary currency "desirable," you ask? Well, one of the arguments frequently trotted out by the the aforementioned skeptics is that an inflationary currency is good because it impels holders of the currency to spend it before its devalued over time by inflation, thereby stimulating spending and stimulating the economy as a whole. This was also the same argument that both the Federal Reserve and especially the Abe administration in Japan made when they started their respective quantitative easing programs. In particular, the Abe administration and the Bank of Japan have stated that they will pump as much money into the system as needed to ensure that the "economic evil" of deflation is defeated. And yet, as someone who is very much skeptical of disgusted with consumerism for consumerism's sake, I find this line of thinking really disturbing. Sure, on paper it's "good" for the economy if Mr. Tanaka goes out and buys a new Toshiba OLED TV with his quickly-depreciating yen, but if Mr. Tanaka already has a perfectly-working TV he bought two years ago and would not have bought the new TV without being "induced" to do so by the threat of his cash becoming increasingly worthless, is the transaction really occurring on a purely voluntary basis (i.e. based on the fact that Mr. Tanaka just wants a new TV) or is there some measure of unnatural coercion taking place, distorting the market? As you can probably guess, I think the latter is more true than the former. The fact of the matter is, a lot of people buy a lot of garbage they don't need due to the coercive nature of an inflationary currency and inflationary currency plays a non-trivial role in supporting our modern consumerist society. Bitcoin, on the other hand, may produce the opposite effect as a deflationary store of value: if Mr. Tanaka holds bitcoin instead of yen, he won't be so easily manipulated by a central authority into coerced consumption. In fact, the opposite is true: if bitcoin generally appreciates it may produce an anti-consumerism effect whereby Mr. Tanaka will only buy a new TV if he actually really, really needs one. Obviously Toshiba doesn't like this since they actually have to try much harder to innovate and convince people that they need new TVs, but I would argue that this is a good thing for the environment and innovation since less external waste is generated and Mr. Tanaka is empowered to build his own wealth rather that remain stuck in the work-consume hamster wheel. If you believe like I do that rampant consumerism is a bad thing, the above bitcoin-induced effect is already really awesome and a great reason to support bitcoin, but I think bitcoin may be an even more potent force for destroying the cancer of thoughtless consumerism by virtue of the fact that the ability to send money instantly and cheaply to anyone, anytime and anywhere could potentially reduce the role that advertising plays in modern society as a way of monetizing information and entertainment. Just think of all the content services that most people use on a daily basis that are supported by advertising: TV, radio, magazines and a good chunk of the internet. Imagine instead a world where all of these content services are built on mandatory (pay-per-view) microtransactions instead of advertising. Instead of having Mr. Tanaka buy Asahi beer, which pays Fuji News to run ads so Mr. Tanaka buys more beer in an endless cycle of pointless consumerism, Mr. Tanaka can just pay Fuji News in bitcoin for the right to view their content and buy Asahi beer on a purely rational basis (i.e. when he naturally wants to) rather than when he’s been brainwashed by endless advertising to do so. Thus, I think bitcoin could become a powerful force for dismantling the inefficient and soul-crushing consumerist society that we all live under, and it’s deflationary nature has an important part to play in inducing the changes needed for this to happen. I know that the above argument is very rough around the edges and could probably be refined and improved by smarter people than me, so I ask you, /bitcoin, do you think bitcoin could potentially become a powerful force for re-aligning our ideology as a society away from consumerism to something more meaningful and fulfilling, or am I being to optimistic and naïve here? TL;DR: I think that bitcoin, by virtue of being a deflationary currency and enabling seamless, instant transactions has the potential to subvert the consumerist dogma of our current society, but on the other hand maybe I’m wrong and just inhaled too much pollen while gardening earlier.
Bitcoin deflation vs Fiat deflation: not the same; different effects.
In the following lines I'll try to explain the difference between deflation in the Bitcoin economy and deflation in the traditional economy and why they'll have different outcomes. First of all, I should say that I'm not a professional economist. Neither am I a libertarian nor a keynesian. Traditional economy In the current traditional economy deflation can be devastating, but not so much because people will start saving and stop spending in order to get richer, but because they'll be unable to pay off their debts. The current banking system allows the creation of an almost unlimited amount of IOUs and debt. The bank owes you the money you deposited, borrowers owe the bank the money they loaned (+ interest) and thanks to the fractional reserve system and other mechanisms it is possible to create thousands of times more debt than there is real money. If the price of the currency raises, repaying that debt will become increasingly difficult. When that happens the economy often enters a depression. Factories will have to close and workers let go in order to save money, cut down costs and be able to repay that debt. If everybody is in debt, deflation is a nightmare. This is why many economists prefer inflation in the current system full of debt, loans and unlimited IOUs. Bitcoin economy Bitcoin doesn't have banks. Even when banks come along, it is probable that a higher amount of people will prefer to own real Bitcoins than the Bank's "IOU a Bitcoin". First of all, if people only want to deal in real bitcoins and avoid accepting bank IOUs, bank's won't be able to create an unlimited amount of credit (because the credit won't be accepted by others). Secondly, a larger amount of people will keep their own Bitcoin and won't be affected by a bank failure. "Too big to fail" won't be a problem if most people keep their coins in their own wallets and not in a bank. This means that the Bitcoin economy is not a debt based economy. Even if bitcoin is very succesful and banks come along, the amount of debt will be limited. What does this mean for deflation? When deflation occurs in the Bitcoin economy it does not affect the economy's ability to repay debt (because there is none or very little) and the consequences will be different. In a deflationary economy without debt, the psychological reasons to spend money are not based on the fear of being unable to pay back a loan/credit, but on the "cost of opportunity". Deflation is an opportunity, but so is an investment and a purchase. What is more beneficious for me? Keeping the money in my pockets?, spending it on something I need? or making an investment in a company I trust? Unlike an inflationary economy where the money holder is rewarded for buying stuff even if they don't really need it, a deflationary economy without debt rewards the smart buyer who knows where to place his money. It also rewards the smart merchant who sells useful goods and services, and spends time investigating in order to produce products that offer a higher oportunity benefit than just keeping the money in your pockets. This is not something new as it is already happening in the electronics and videogame industry, where it is important to keep increasing the appeal and capabilities of their products in order to make it more enticing to spend that money now than six months later. This also fuels innovation. Here we're talking about a totally different type of deflation and totally different consequences. This cannot be ignored and we can't treat them as if they were the same. (Keep in mind that too much deflation or hyperdeflation will always have very negative effects. We're talking about a moderate amount). Additional information: "But right now no one wants to spend their Bitcoins!" It is indeed true that there are many people who rather not spend too much of their coins. But this is only so because right now bitcoins are a limited asset and hard to obtain. To buy bitcoins one must either be a miner or spend time sending a bank wire, deal with frustration on bitcoin exchanges, meet up with strangers, etc. Bitcoins are still too hard to come by. This means that I won't want to spend something that was difficult for me to get. I rather spend fiat because I get paid in fiat, it's easy to get and it's everywhere. Take, for example, gold coins. If I could choose whether to pay for something in paper money or gold coins, right now I would be out of my mind if I used the gold coins (despite being worth the same). Gold coins are something precious and difficult to come by. But if gold coins were everywhere, if you were being paid in gold coins, if you could get gold coins in a matter of seconds and if there were a high amount of gold coin liquidity, then things would change and you would be much more likely to spend them: "I can get them anywhere, anytime." You'd think. The same is happening to Bitcoin right now. It is not the deflationary aspect of the currency that stops people from spending them but the difficulity of getting them. Cheers!
[uncensored-r/Bitcoin] Deflation - Biggest bitcoin problem
The following post by iota_pending_state is being replicated because some comments within the post(but not the post itself) have been silently removed. The original post can be found(in censored form) at this link: np.reddit.com/ Bitcoin/comments/72snnv The original post's content was as follows:
In my opinion biggest bitcoin problem - deflation. People make a choice between invest money into real economy and bitcoin. And chose to sit on bitcoin instead spend money or invest. What do you think?
Sorry if this is already widely done, but I haven't seen it explicitly stated. So, ignoring the temporary Mt.Gox drop happening currently, it is easily shown that the USD price of BTC generally goes up, and if you're on this subreddit, you may think it will go up for a while longer. Therefore, one may semi-confidently offer products and services in BTC for cheaper than their current USD value, because one knows the price will go up soon. This is even in addition to the transaction and transfer costs associated with turning USD into BTC via bank transfers or something like BitInstant. Because of the increasing value of BTC, dollars are essentially a dying currency and as such should have a premium associate with it's use as compared to BTC above and beyond the exchange rate, now that the price rises so fast. We're in a different environment than just a few months ago, or even a few weeks ago. Because of this, products can conceivably be much cheaper when denominated in BTC than in USD, and this would therefore create an incentive to buy and use BTC. This is all only assuming that BTC/USD goes up mind you, but it creates a positive feedback loop to encourage this automatically. If you're buying a product and selling it again that day, this would not work, but if you're selling your old couch or can't move your product quickly, I think it makes perfect sense. For example: You have a product you are selling on Craigslist. You list the price as $100 or the equivalent of $75 in BTC. If you have the confidence that the equivalence will rise to $100 or higher in a couple weeks before you need the cash, this is no problem for you, and it may help you liquidate your product faster. I see companies starting to offer products in BTC, but it seems that they still use the current exchange rate. Conceivably, it should be cheaper than this because of the difficulties of exchanging the currencies, but the vendor would also be able to offer an additional substantial discount because of the future value of the currency, and the vendor may make more profit this way by selling more products because of the low price, because demand is staying the same. I think people may do this already to a certain extent, but if this were put widely into practice and it were known by the general public that products were cheaper in BTC than in USD even after exchange costs it would be sure to attract extreme attention.
Bitcoin deflation rewards large holders at the expense of everyone else.
A theoretical bitcoin based economy would mean complete misery for 95% of participants. Why? The chronic shortage of bitcoin's would be "fixed" via large holders lending out their supply at interest. As the price for goods/services fell, the real rate of interest would rise, making most of the BTC debts unrepayable. This would lead to asset seizures, property forfeitures. All into the hands of the initial wealthy. Basically a tiny elite(those with hoards) would simply lend and hoard all day, while the rest were subjected to debt bondage. This was always the grand vision of Murray Rothbard, who advocated a 100% gold standard in which his gold ducats would swell in value from the labor of others. Bitcoin is basically this exact scheme except in digital format. A persistent bitcoin deflation transfers purchasing power from wealth creators(labor) to those whose sterile BTC's simply sit on their harddrives. Do not make comparisons to fiat in the comments, I am NOT advocating or promoting fiat. This is merely a few points about a theoretical 100% BTC based economy.
Bitcoin and Deflation Murray Gunn • September 21, 2018. If Bitcoin's the future of money, get ready for deflation. In 1820 a gloriously named Scotsman, Gregor MacGregor, invented a fictitious country. He then persuaded people to invest in said country and ran off with the loot. That country went by the name of Poyais. It's another story and, if you want to learn more click this, but we will ... Could deflation cause problems for bitcoin? Although it has been overshadowed in recent months by mostly regulatory news, the issue of deflation and bitcoins is still a topic worthy of debate. Bitcoin kann in seiner jetzigen Form kein Fiat-Geld ersetzen und ist nicht für die Rolle der Hauptwährung der Weltwirtschaft geeignet. Selbst wenn die Aufsichtsbehörden Bitcoin akzeptieren, werden Deflation und andere Faktoren die Entwicklung der Kryptowährungswirtschaft behindern. Und bis jetzt wird Bitcoin eher zum Verdienen von traditionellem Geld als zum regelmäßigen Umtausch verwendet. As a result, Bitcoin mining becomes more expensive, and miners get less coins as Bitcoin mining progresses, so mining will only continue if the bitcoin rewards are worth more than the cost of the electricity that the Bitcoin mining process requires. So deflation is literally hard-wired into the Bitcoin protocol. Furthermore, contrary to mainstream economic arguments, deflation is actually a ... Bitcoin sind zwar vor Inflation geschützt, das System neigt aber zur Deflation. Gleichzeitig unterliegt der Wechselkurs immer wieder enormen Schwankungen und ist im Zusammenspiel mit der sehr ...
Well guys if you like my videos and want to share a little bitcoin to help me, this is my address: 11eLt96RhL2sMo7mCCYxGwQSBW8kFrhDn To access Hashflare Clic... Now accepting Bitcoin donations. Support this channel: https://www.gofundme.com/MoreMrCropperVids Bitcoin (BTC) Update! Blick auf die Charts und die News des Tages! 💰 $1090 Bonus bei ByBit sichern: https://www.bybit.com/app/register?affiliate_id=1873&lang... It's time for the truth about both inflation and deflation! The narcotic of propaganda, is wearing off! They are going to have to come up with a stronger potion to put us under! Inflation means ... Money is what drives the world, but there is a huge problem with it...it's built upon debt, and there is more debt than there is money in the world. This situation is by design, as is what keeps ...