Re:Bitcoin vs. Ben Bernanke
by eric_bullington on Sunday May 05, 2013 @11:39AM
(#5658630)
Unless a large portion of the marketplace for those goods and services moves to the currency's p2p client itself, at which point it becomes trivial to integrate price levels (i.e., a "basket of goods and services") into the protocol.
Imagine if an expanded ebay marketplace, including a wide range of goods and services, were integrated into today's Bitcoin protocol.
Unlikely, and very hard to implement, but not impossible.
Historically speaking, the free market will gravitate to a currency that has a stable price and appreciates at least a little bit over time. No one wants to hold a depreciating currency. We use that fact to drive people to spend by driving interest rates down. Hence the lack of savings and the high levels of consumer spending.
The "historically" is a bit misplaced. Historically speaking, people almost universally ended up using whichever currency was used for taxation and in use by other significant institutions for practical purposes. Inflation basically never had anything to do with that.
Rich people might have been able to use other things as a store of value though, but things can only become lasting stores of value if they start out having some initial use.
I wonder if that part is crowdsourceable, somehow... basically, tie the transaction volume/demand/etc. to its worth.
Re:Bitcoin vs. Ben Bernanke
by illuminate on Sunday May 05, 2013 @02:34PM
(#5659248)
It is not crowdsourceable when the speculators move to work against such a motive.
"And for those who wish to avoid both inflation and deflation, what about a digital currency programmed to maintain stable prices, avoiding mischief by central bankers as well as the possibility of deflation?"
My gut is that this is not possible. Enforcing stable prices requires constant data about price levels, and with decentralized markets there doesn't seem to be an accurate way to get that data.