I'm not sure how Bitcoin relates to the gold standard exactly though. On its own it can't be debased, but on the other hand it's not tied to anything physical so what happens if a government decides to "fork" it into a new currency (which increased supply for instance) and use that to pay public workers and raise taxes? Wouldn't that effectively do the same thing as debasing the currency? After all bitcoin is effectively a pure concept. Those are interesting questions but I lack the economic knowledge to answer them.
> - Finite supply of currency is good
> - Inflation is bad
> - Bitcoin is "best money"
> - Everything else is bad money
My arguments aren't based on feels about what one might think as "good" or "bad", but just based on the undeniable fact that people are self interested. If it's a choice between holding my assets in a currency where they won't be devalued, and holding them in another where they will lose 1% or 2% annually, which am I going to chose?
The people who care about the rich getting richer are really complaining that they aren't getting richer by the same ratio. They obviously won't if they think that the second option was a better choice.
The rich already get richer. If they have money, they will invest it into other assets which offer them various levels of return, some more risky than others. People without money are traditionally excluded from these kinds of investment, and thus, their only for saving for the future is to put money into a bank account and let it have less purchasing power than the labour they put in to earn it in the first place.
Bitcoin changes that completely. Anyone, even low-income earners, can put small amounts into Bitcoin and it will retain value in the longer term. They can completely shift their mental mode from high time preference into low time preference and begin investing in their own future. The idea that everyone needs to spend spend spend is not grounded in reality. It's necessary for governments to continue their bad policy making which only enriches the elite who print the money. High time preference is the source of inefficiencies, cutting corners and high debt.
People should save rather than spend. People should spend more wisely in ways that are an investment into their own, and their descendants future, rather than borrowing from their children's labour through debt.
A currency has many purposes, but the primary characteristic of a good currency is that people expect it to have about the same value tomorrow as it did today. Unless you're in finance speculating on arbitrage, you're not putting long term investments into good currencies, because rationally you expect to spend that money again. Instead, you put investments into assets. Something that bitcoin apologists like yourself fail to dissociate is the difference between currency and asset is crucial because both have different definitions of what makes them good.
>Bitcoin changes that completely. Anyone, even low-income earners, can put small amounts into Bitcoin and it will retain value in the longer term.
This is misleading and flat out dangerous to anyone who is reading your comment and takes up your advice. The price volatility, hundreds of hacked exchanges, and amount of fraud on Bitcoin alone proves this wrong.
I'm not intending to give investment advice. People can take what they want from my comments. If you're waiting for the price to stabilize before you "invest" in Bitcoin, then I hate to tell you, but you're probably going to be paying a premium on it. The price of Bitcoin is only going to rise in the long term, and the earlier you get in, the less you'll be paying for it.
Hacked exchanges and fraud have nothing to do with Bitcoin as a store of value. It's a case of bad security and decision making. Gold will also not retain it's value for you if you leave it lying on your lawn. If you take the necessary steps to make your Bitcoin secure and fault tolerant, they can be more robust against any kind of attack than Gold or cash.
Will it? The one thing that Bitcoin has not been noted for is keeping a stable value. Even that's fine, as long as the value doesn't go down - nobody complains that the value isn't stable if the value keeps going up. And, Bitcoin has... um... had been doing fine on that front. Now it's not. And I don't see evidence that it will be a good store of value in the future. I hear argument, but the available evidence is not for Bitcoin being a stable store of value.
But look at it another way. 1 Bitcoin is still 1 Bitcoin even after 100 years, and still 1/20999999 of the total number of Bitcoins ever created. It's an extremely stable store of value. Stability which was previously unheard of. The problem is that you are valuing it in terms of an asset that is far more likely to fail, given its current trajectory. You can't keep printing and borrowing forever.
Everything will eventually be priced in Bitcoin.
And Chrisbucks are the reason why altcoins have no long-term value. If anyone can create coins then there's an infinite supply and their value will go to zero. Bitcoin is the only system which has not attempted to inflate the supply beyond the originally programmed supply. The original supply was necessary because it was the first asset of its kind.
Everything else misses the point.
Objection, your honor. Assumes facts not in evidence.
We get it, you've bought in to the idea that Bitcoin is the one true currency. (That's why a statement like "1 Bitcoin is still 1 Bitcoin even after 100 years" makes sense to you.) The rest of us, however, are not sold on this. We suspect that 100 years from now one Bitcoin will get you exactly nothing of value. Speaking to us from a perspective that Bitcoin is the one true currency is completely unpersuasive to us. If you want to convince us, you need to tell us something that makes sense in our viewpoint.
> Take any point in Bitcoin's history and compare its value then to three years earlier. There is no case where it was worth more three years before.
That's a decent attempt at doing what I asked for. Unfortunately, I find it less than persuasive. It's an asset that has a total history of 10 years; there's a pretty small sample size here.
The forex example is a bit off, though. If I don't believe the price of the Euro, for example, well, there's still a ton of stuff being produced in countries that use the Euro, and they trade with other countries, and that sets a price for the Euro in relation to those other countries. But how much stuff is produced in places that use Bitcoin?
Perhaps I should have said in "places" that use Bitcoin, because it doesn't have to be countries. But how much stuff is for sale only in Bitcoin? That's where Bitcoin is going to have a price as a currency. If there aren't many things with Bitcoin-only prices, then Bitcoin can still have a value, but it's value is more like gold - as an investment that's not subject to inflation. Even as that, it can have a value forever - gold's done pretty well at that, after all.
But I still think it's too soon to see if Bitcoin will do that. Gold has several millenia of being accepted; Bitcoin has 10 years. We'll see what happens in the long term.
In your comment you state, without any source or reasoning behind your claims, that:
- Finite supply of currency is good
- Inflation is bad
- Bitcoin is "best money"
- Everything else is bad money
What about the fact that deflation means that people are incentivized to stash money instead of spending it (something you admit doing yourself)? What about the fact that it means that the rich becomes richer while doing nothing while the poor can't make money because nobody wants to spend it? Don't let greed blind you. How does society work if your main form of currency is meant to be "hodled" and people who spend it are ridiculed as suckers?
Bitcoin is currently near-useless as a currency because it's mostly an asset for speculation. How is that going to change in the value of bitcoins keeps increasing by virtue of being artificially capped?
That's what kills cryptocurrencies: you need the deflation to reward early adopters but in the end it means that your currency is effectively unusable as a currency.