The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

Re:The Quora post that killed Bitcoins. Please discuss if hi... by beefman on Thursday June 02, 2011 @01:46PM (#2613042)

Hi Adam, I'm Carl Lumma. I usually upvote your posts on Quora but I didn't upvote this one because of "scam" and also because you gave more reasons than necessary. "Built-in deflation" is alone the reason bitcoin cannot work as a currency (at least, not without a prevailing currency to act as a 'heat sink'). This can be remedied of course by the practice of holding bitcoins on deposit in exchange for demand receipts, which can then be printed and sold without restricting the withdrawal of deposits. And I suspect that, with continued popularity, institutions will start doing this.

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Re:The Quora post that killed Bitcoins. Please discuss if hi... by Gormo on Thursday June 02, 2011 @08:24PM (#2614644)

Why is built-in deflation necessarily a problem?

If the real economy continues to generate investment opportunities, wouldn't the deflation rate just supplement that? Sure, you could put money in your mattress for 5%, but if you can invest for a nominal 10% and thus yield a real 15%, why would you choose the mattress?

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Re:The Quora post that killed Bitcoins. Please discuss if hi... by beefman on Thursday June 02, 2011 @10:15PM (#2614899)

If this is an average loan, all 15% of its real return must be captured by deflation since the money supply cannot increase 10%.

But then the mattress rate is also 15%.

Of course some loans are better than average, and some are worse. The "deflationary spiral" takes out the worse ones first. That lowers the average and takes out the next tier, until the average is zero. Actually it goes below zero, to the average rate of real depreciation (e.g. termite damage to houses). Well, that's the bottom equilibrium anyway.

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Re:The Quora post that killed Bitcoins. Please discuss if hi... by Iv on Monday June 06, 2011 @05:03AM (#2624140)

And also what is the difference between this scenario and a scenario where you can get a saving account that has a higher rate than inflation ?

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Re:The Quora post that killed Bitcoins. Please discuss if hi... by acslater00 on Thursday June 02, 2011 @02:09PM (#2613177)

Fair enough.

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