Inflation does cause currency hoarding because the person requires to keep a higher balance in order to afford things.

I have no idea why anyone would want their currency to deprecate in value, only time when that is desirable is under a fractional reserve system when alot debt created money is circulating in the system. Bitcoins can be created in order to loan them to someone simply because they have a desire to go into debt.

A big government wants the value of currency to fall in value as it is one of their means of taxation. Inflation also causes capital gains on assets so when someone wants to sell, because of the inflation, the asset is worth more in nominal value and that % is taxed.

Someone who is a lefty will not like bitcoins as taxation would be straight forward and can not be disgusted, so if the government wanted to send aid to africa, everyone would have extra bitcoins taken from them instead of the current way where the government goes into debt to pay for the aid and everyone pays for it through inflation.

 

A dollar is 371.25 grains of silver, that is what the constitution states what a dollar is. A dollar is not a piece of paper backed up by nothing. Federal Reserve notes are not dollars.

http://recordings.talkshoe.com/TC-22187/TS-368400.mp3

Have a listen to this interview with Jim Townsend. He really does into depth about the Dollar and many other things too. It it beyond interesting.

http://www.youtube.com/watch?v=vNNv-kY2Pug

There is a youtube of him there talking about it as well.

You wouldn't take a wooden nickel, then why would you take a paper dollar.

That is stupid. If it takes so much processing power to create a bitcoin, why would someone else ask you to process something else for them which they will pay a btc for, they would have had to do the processing themselves to generate the bitcoin to pay you for folding. Very stupid idea fellas.

trentzb, good question. I am referring that P2P currencies will inflate in supply and their value will go down causing people not to use them as a store of value. Yes you would beable to exchange between P2P currencies and that is the very thing, the total amount of P2P currency in existence would increase. The better way to think about it is not in terms of total supply of bitcoin currency, but as in total supply of P2P currency as they are all the same, ofcourse different ones would have more on issue and others would have larger market penetration which would influence their value. As a new P2P currency is created, the greater amount of P2P currency would be on issue.

em3rgentOrdr, no I am not talking about bitcoins forking into different versions, I believe those forks will be worthless and I never mentioned forks. The issue is the emergence of competing P2P currencies.

astonix, P2P currency is potentially limitless in quantity, Gold can not have different competing 'versions' or 'flavors'. If bitcoins reached a stable value for P2P currency due to supply & demand, it reached an equilibrium finally in the market and it's price stabilized at $50, well if 10 new different flavors of P2P came out onto the market, had the same amount of 'units' in circulation and the use of each of these different flavors became equal to bitcoin, then bitcoin's value would fall by 10 times. The amount of P2P currency in existence would increase by 10 times making the orginal bitcoin worth less.

Tell me, if a competing P2P came out tomorrow and you could earn 10 times as many 'units' as you could with bitcoin, ofcourse everyone would jump onto the new P2P currency to mine it until the amount and difficulty came inline with bitcoin. People are not just going to stick to Bitcoin because it is 'Bitcoin' and was the first one to come out on the internet.

Hans0, "Bitcoin is not just Gold, it is Gold 2.0: anonymous and uncontrollable. There is an incentive to switch to bitcoin, but no incentive to switch to bytecoin cause it is just the same with the single difference that nobody demands it."

People will use the other P2P currencies, there is no reason why only bitcoin will be the only P2P currency people will demand. I have explained the incentive many times why people will switch, again like many here ignoring what I have written.

comboy, nobody as addressed the rise of competing P2P currencies. Everyone seems to only be fixated on bitcoins limited 21 million unit supply, when infact the issue is P2P currency in existance, not simply one type or flavor of P2P in existence.

I thought that is a funny picture in relation to bitcoins, I know it's not the same thing, but 'kidds' are mining a type of electronic currency.

Why hasn't anyone addressed the issues I raised? nobody has refuted anything, some of the replies appear that some of the posters have not read anything I have written like the first poster who just blurted out that it is far too early to sell at $30 and a recent poster here simply showed annoyance and and suggested that a subforum be created for those who wish to post information on why bitcoin will fail.

Is everyone trying to 'keep the faith'?

Generally the type of deflation people fear today is the result from banks using a factional reserve system, lending out more money than what they have in deposits. With bitcoin this is not possible. Excessive debt can not build up in a P2P currency. When america was on a real gold standard before the 1913 federal reserve act, prices in terms of gold had been deflating in value to gold for hundreds of years.

jon_smark, it would be correct to say that everything has already been deflating in value in relation to bitcoins. A bitcoin was worth less than $1 afew months ago. This is not a problem because banks have not created extra bitcoins and loaned them out into circulation. There is no debt attached to bitcoins so nobody has any problem defaulting on loans because the value of bitcoins have gone up in value. That is why fiat currency keeps dropping in value so as to make it easier to pay back the money to banks and also provide incentive for borrowers to borrow money, most people expect money to keep falling in value, otherwise they would not take out loans.

I will explain why the value of bitcoins will fall, the current market price of them is a joke but not from the reasoning people are using on the forums which is faulty. I will explain this below

There is only so much gold in the world, still alot of it has not been mined and will beable to be mined in the future. As for physical currency, out of all the elements, gold is the most desirable followed second by silver. Gold can't be diluted in value, ie a second identical currency coming being different in name only but having all the same properites of gold. Imagine another element that was the same as gold was found, and was able to be found in the same quanities of gold but it had a different color, say light green color and it was called gold2. Half the people began using gold2 in the same way as gold1 is being used. the value of gold1 would be cut in half with the new currency being put into circulation competing parallel with each other. Ofcourse this will never happen, there is no such thing as gold2.

Unfortunately this is not the case with bitcoin. Yes bitcoin is restricted to the total amount of bitcoins that will be found which is 21 million. Unfortunately it is a P2P currency and with the success of bitcoin, other identical P2P currencies will come into existence and the same problem will arise as in the case of gold1 and gold2. With P2P currency, the amount of different named P2P currency will expand. A second P2P currency will come along using the same source code as bitcoin or slightly different but essentially the same. We will call this second currency bytecoin, it has all the same properties as bitcoin as in only being limited in supply to 21 million bytecoins. People with mining rigs will stop mining bitcoins and begin mining bytecoins as it is just starting out, the hash sizes will be smaller and easier to generate more bytecoins than bitcoins. Soon the number of bytecoins in existence will be similar to bitcoins. Half of the people using bitcoins and the other half using bytecoins, also the value of the two P2P currencies is the same because roughly the same number of each are in existence but the orginal bitcoin would be cut in half.

There is incentive for people to move to the new P2P currency as in the early stages it is more profitable to generate P2P currency and as you have seen in bitcoins, the early adopters made the most money.

This process will continue on indefinitely until all P2P currency is worthless. At the end of P2P currencies life, there could be millions of different competing P2P currencies.

Throughout the ages everyone has been trying to turn everything into gold, Lead into gold, paper money into gold and now electronic bits into gold. P2P currency holds alot of the qualities of gold but competing versions of itself can not be created. P2P is a good way to transfer money, conduct business but not as a means of storing value. If the government made a mandate that only bitcoin was to be the only allowed P2P currency to be used on the internet, then it would become very valuable but that is not the case.

If you have bitcoins, you'd be a fool not to sell them at $30. I have also seen a personal website of someone willing to sell gold for bitcoins!!!! It is crazy. I could be wrong in the short term, but in the longterm I will be proven correct. Ideally hold onto your bitcoins until another type of P2P currency comes into existence and becomes being used in mass, that will be the best time to sell as it is when the value of bitcoin will be at it's highest just before people also begin using the second P2P currency as well.

Hope you found this interesting.