Re:Bitcoin falls from $266
by Jtsummers on Wednesday April 10, 2013 @07:18PM
(#5528864)
Thoughts on your essay:
Fractional reserve banking - if it's merely backed in BTC then what's the point of bitcoin? It entirely defeats the system as people will be back to fiat currency.
Early adopters and clever nation states have the opportunity to totally turn the world upside down in a BTC backed future. They should have a significant percentage of all existing (as it's finite) BTC which would distort their actual worth. A clever North Korea - estimated GDP of $40 billion, and about $4 billion each in exports and imports - could hold an incredible amount of BTC buying power. Why would any other nation want to acknowledge them? Similarly, they'd be holding onto a financial nuclear bomb if they held enough BTC. They'd be able to almost singlehandedly alter the value (in purchasing power) on a whim with a significant enough percentage.
---
Next, you focus heavily on hyperinflation, but never once seemed to mention deflation. Or the fact that under a scenario like above, hyperinflation is almost feasible as suddenly a large amount of BTC could reenter the market. Long term it would get absorbed, but short term impacts could be severe.
Fractional reserve banking - if it's merely backed in BTC then what's the point of bitcoin? It entirely defeats the system as people will be back to fiat currency.
Early adopters and clever nation states have the opportunity to totally turn the world upside down in a BTC backed future. They should have a significant percentage of all existing (as it's finite) BTC which would distort their actual worth. A clever North Korea - estimated GDP of $40 billion, and about $4 billion each in exports and imports - could hold an incredible amount of BTC buying power. Why would any other nation want to acknowledge them? Similarly, they'd be holding onto a financial nuclear bomb if they held enough BTC. They'd be able to almost singlehandedly alter the value (in purchasing power) on a whim with a significant enough percentage.
---
Next, you focus heavily on hyperinflation, but never once seemed to mention deflation. Or the fact that under a scenario like above, hyperinflation is almost feasible as suddenly a large amount of BTC could reenter the market. Long term it would get absorbed, but short term impacts could be severe.