Bitcoin Forum

I was thinking about a theoretical land where bitcoins were the national currency.  Call it Bitcoinia.  Probably a seastead!

Anyway, how would I negotiate my salary in such a place?  It is a constantly deflating currency by nature, so each paycheck is worth more than every other paycheck.  And with only so many bitcoins in existence every employer would not be able to pay their employees the same wage month after month after month.

Not knocking it, I'm 100% on board here.  Just wondering if anybody has insight into a deflationary economy.

it would basically be the same way you negotiate your salary now... just flip the tables.

Currently the employer wants to pay as little as possible, signs you on and continues to pay you $X. the USD is inflationary so the next year while the check says $X your ability to spend says $X(0.97) Im just going to use 3% rate here, feel free to substitute with any other value.

You negotiate toward a raise and the employer negotiates for holding pay steady (read 3% pay cut).

Now flip into a deflationary system. a few options present themselves.

1.) same system reversed - you have salary of $X and want to hold that salary (ready 3% raise) employer wants to cut salary to compensate for deflation $X(0.97). basically base your salary on its buying power not on an amount of currency. take into account changes in cost of living, inflation, etc and you will see what your REAL salary is.

2.) % of revenue - each person would be paid a fluctuating amount that is a direct representation of the revenue of the company. Raises or cuts would probably be int the 10th or 100th of a percent of company/department revenue. I wouldn't expect this to catch on too much but presents an interesting model for sales departments. the better you do the more you (and everyone else) makes. kinda socialist but in small numbers.

3% a year, either inflation or deflation, is not what a speculative commodity behaves like. Expect violent, random swings, nothing one could use in a contract, yet a perfect venue for speculators to extract wealth from the userbase.

in a theoretic framework when bitcoin or some other deflationary currency is established, it deflationates with the rate of economic growth. so with a fix salary, you participate from economic growth 1:1. as long as "salary/profit per worker" doesnt chance (maybe due to advanced technology), there is no need to adjust the salary. completely different to the situation nowadays, where labor unions must work hard for adjusting salaries.

i consider a currency which deflates by economic growth rate the only "fair" currency.
inflation is like a tax on poor people (far from the tap) to the rich ones (near the tap). compared to a fixed-amount-deflationary-currency, this tax is around 6-7% in developed countries.

Your salary could be tied to average price of some commodities. For example - your salary could be equal to the price of a car divided by 12. This is a simplified example of course :) You would probably want to use a basket of many different commodities.

Actually it IS tied to ALL goods, the economy produces. It deflated with the rate of the production growth. 5% growth means 5% deflation, means you can buy 5% more "stuff" with the same salary as the year before.