proudhon
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November 12, 2013, 04:39:43 PM |
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The rising and volatile price of BTC/USD is not good at all for bitcoin as a currency, although it is good as an investment / speculative asset.
From customers perspective: Why should I spend my bitcoins to buy an iPad today if the price of bitcoin goes up every day? I keep my bitcoins they might go up 1000%
From webshops perspective: Why should I accept bitcoin as a currency if the price is volatile? I might sell my products with a loss if the BTC price drops after I sell my product and want to convert the revenue to USD.
Right, those are just restatements of the question under consideration. What's interesting is that contrary to these sorts of standard formulations of why deflation is bad, bitcoin has been experiencing extreme deflation over its life, and yet bitcoin spending appears to be increasing over time, and merchant adoption appears to be increasing over time. That's why this is interesting. We can all read the wiki on why deflation is thought bad by the most popular economic theory. And yet, it seems the theory's predictions may not be presenting themselves (a) at all or (b) much more weakly than the theory would suggest relative to how extreme bitcoin deflation has been. The real interesting work has to do with substantiating all these anecdotal claims about increased spending and increased adoption. Then if those claims are supported, explore explanations for why the theory isn't predicting well in this case. Is it because enough time hasn't passed? Are there other properties of bitcoin and its economy that make is sufficiently different from the types of cases deflationary theories typically apply to? Is the theory just plain generally wrong? Just saying, "Deflation, therefore bitcoin will fail" as you have done, and as the author of the article that sparked this thread has done, is, IMO, a failure to thoughtfully consider the issue. |
Bitcoin Fact: the price of bitcoin will not be greater than $70k for more than 25 consecutive days at any point in the rest of recorded human history.
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vesperwillow
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November 12, 2013, 05:03:10 PM |
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The rising and volatile price of BTC/USD is not good at all for bitcoin as a currency, although it is good as an investment / speculative asset.
From customers perspective: Why should I spend my bitcoins to buy an iPad today if the price of bitcoin goes up every day? I keep my bitcoins they might go up 1000%
From webshops perspective: Why should I accept bitcoin as a currency if the price is volatile? I might sell my products with a loss if the BTC price drops after I sell my product and want to convert the revenue to USD.
Right, those are just restatements of the question under consideration. What's interesting is that contrary to these sorts of standard formulations of why deflation is bad, bitcoin has been experiencing extreme deflation over its life, and yet bitcoin spending appears to be increasing over time, and merchant adoption appears to be increasing over time. That's why this is interesting. We can all read the wiki on why deflation is thought bad by the most popular economic theory. And yet, it seems the theory's predictions may not be presenting themselves (a) at all or (b) much more weakly than the theory would suggest relative to how extreme bitcoin deflation has been. The real interesting work has to do with substantiating all these anecdotal claims about increased spending and increased adoption. Then if those claims are supported, explore explanations for why the theory isn't predicting well in this case. Is it because enough time hasn't passed? Are there other properties of bitcoin and its economy that make is sufficiently different from the types of cases deflationary theories typically apply to? Is the theory just plain generally wrong? Just saying, "Deflation, therefore bitcoin will fail" as you have done, and as the author of the article that sparked this thread has done, is, IMO, a failure to thoughtfully consider the issue. I see it from both perspectives. Yeah, I could spend .01btc today on something, and then see the exchange value of that go up (or down) the next day. Three points: 1. If I'm someone taking btc for payment, that interests me because the payment I just received could be worth more when I go to exchange it. 2. I'm not spending all of my btc at once and am keeping some for trading anyhow 3. Gold value fluctuates, people don't think of this when they're using federal reserve notes |
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Lauda
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Terminated.
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November 12, 2013, 08:46:50 PM |
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The rising and volatile price of BTC/USD is not good at all for bitcoin as a currency, although it is good as an investment / speculative asset.
From customers perspective: Why should I spend my bitcoins to buy an iPad today if the price of bitcoin goes up every day? I keep my bitcoins they might go up 1000%
From webshops perspective: Why should I accept bitcoin as a currency if the price is volatile? I might sell my products with a loss if the BTC price drops after I sell my product and want to convert the revenue to USD.
Why should I sell my jewelry now when the price of gold/diamonds/rubies/etc might increase tomorrow? huh. |
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" 😼 Bitcoin Core ( onion) |
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jbreher
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lose: unfind ... loose: untight
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November 12, 2013, 09:07:15 PM |
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Why does the US dollar have any value? The officials claim it's backed by gold...
Umm... no. While 'the officials' is a sketchy rhetorical term, none of those who have some official relationship to the maintenance of the USD truthfully claim that it is backed by gold. Because the USD most certainly is not backed by gold. |
Anyone with a campaign ad in their signature -- for an organization with which they are not otherwise affiliated -- is automatically deducted credibility points.
I've been convicted of heresy. Convicted by a mere known extortionist. Read my Trust for details.
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franky1
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November 12, 2013, 09:33:34 PM |
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Could rapid price appreciation prevent Bitcoin's success?
or
Bitcoin's success is the rapid price appreciation
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I DO NOT TRADE OR ACT AS ESCROW ON THIS FORUM EVER.
Please do your own research & respect what is written here as both opinion & information gleaned from experience. many people replying with insults but no on-topic content substance, automatically are 'facepalmed' and yawned at
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red_elk
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November 12, 2013, 10:17:27 PM |
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I think bitcoin will not exactly "fail" because of deflation or price volatility, but it will become a sort of investment commodity, rather than globally used currency and fiat replacement. Eventually it will be replaced by some other cryptocurrency which will be more suitable and convenient for use in goods trading. And bitcoins will probably become similar to precious gems or rare collection items, like post stamps. They will be stored as a long term investment, but rarely used in trading, except for speculation.
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Lauda
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Terminated.
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November 12, 2013, 11:10:12 PM |
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Why does the US dollar have any value? The officials claim it's backed by gold...
Umm... no. While 'the officials' is a sketchy rhetorical term, none of those who have some official relationship to the maintenance of the USD truthfully claim that it is backed by gold. Because the USD most certainly is not backed by gold. With the way that they are inflating USD I doubt that they have enough gold anyways. |
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" 😼 Bitcoin Core ( onion) |
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Compton
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November 13, 2013, 02:21:34 AM |
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The real interesting work has to do with substantiating all these anecdotal claims about increased spending and increased adoption. Then if those claims are supported, explore explanations for why the theory isn't predicting well in this case. Is it because enough time hasn't passed? Are there other properties of bitcoin and its economy that make is sufficiently different from the types of cases deflationary theories typically apply to? Is the theory just plain generally wrong?
Just saying, "Deflation, therefore bitcoin will fail" as you have done, and as the author of the article that sparked this thread has done, is, IMO, a failure to thoughtfully consider the issue.
It seems to me that it is really hard to tease out whether the theory is predicting well or not because of transaction anonymity. First, the oft-quoted transaction volume stats are likely contaminated by direct or indirect speculation in btc itself. There is a price-volume correlation in equity markets, for instance. What you'd want to isolate and measure to see if it is behaving well as a value transfer mechanism despite the deflation are non-btc related transactions denominated in btc (ie, not direct purchases/sales involving the currency itself, not indirect ones (ie, mining equipment or btc enterprise equity transactions)). Second, even if the theory does predict well (ie, volatility and deflation hinders certain kinds of transactions -- especially long term contracts), there are other dynamics at play that probably tug in the opposite direction. As public knowledge and mindshare of btc expands, you'd expect certain kinds of transaction volume to increase (spot market transactions, small transactions) while others (long term supply, construction, or debt transactions) would probably not pick up until there is some semblance of stability. I'd happily pay for lunch every day with a fraction of a bitcoin, but I'd refuse to denominate a long term contract in the currency today (without extensive hedging, which defeats much of the allure of the currency in the first place). |
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Coinseeker (OP)
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November 13, 2013, 11:42:23 AM |
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At this point in the discussion, it's obvious "wait and see" is all anyone can really do. My guess is it will significantly stall spending the further values rise to these unbelievable and for some, life changing levels. From and investment standpoint, spending Bitcoin's at this point in time, makes absolutely no sense. As Bitcoin finds some sort of "stable" ground for a reasonably consistent period, I can see spending increasing but for now, increased spending with increased value defies logic. And with no actual proof to disprove that, I go with logic.
Bitcoin is kinda like Michael Jordan. No, he's not going to dunk from the free throw line anymore, but he'll still kill you with his jumper. Bitcoin may not end up being some great daily transactional currency but it will remain as an excellent digital store of value. Time will tell.
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If your ignore button isn't glowing, you're doing it wrong.
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vesperwillow
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November 13, 2013, 12:23:51 PM |
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Why does the US dollar have any value? The officials claim it's backed by gold...
Umm... no. While 'the officials' is a sketchy rhetorical term, none of those who have some official relationship to the maintenance of the USD truthfully claim that it is backed by gold. Because the USD most certainly is not backed by gold. With the way that they are inflating USD I doubt that they have enough gold anyways. Those are essentially my points. There is no true value. Folks claiming BTC has no true or inherint value, continue to use federal reserve notes without question. |
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Coinseeker (OP)
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November 13, 2013, 01:20:25 PM |
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Those are essentially my points. There is no true value. Folks claiming BTC has no true or inherint value, continue to use federal reserve notes without question.
That's because Federal Reserve Notes are accepted everywhere and extremely easy to obtain. Bitcoin is a long ways from being able to say either. |
If your ignore button isn't glowing, you're doing it wrong.
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vesperwillow
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November 13, 2013, 01:33:50 PM |
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Those are essentially my points. There is no true value. Folks claiming BTC has no true or inherint value, continue to use federal reserve notes without question.
That's because Federal Reserve Notes are accepted everywhere and extremely easy to obtain. Bitcoin is a long ways from being able to say either. Precisely. The price appreciation won't stunt BTC or any altcoin--being able to use it will. You can have millions of whirlygigs but until they can be used for something, there will be no value to others. |
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jeppe
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November 13, 2013, 05:58:42 PM |
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Bitcoin is both a currency and as a stock  but you could argue the same with other currencies...... |
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PumpkinCoin
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November 13, 2013, 06:16:59 PM |
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It seems simple to me. If you have BTC and think it is overvalued or fairly valued, you will be inclined to spend those BTC. If you think it is undervalued, you horde. At some point equilibrium is reached on a group level.
A retailer could open a Coinbase account or something similar and almost instantly convert a BTC payment to USD. In the future perhaps there will be an instant conversion to an ACH payment. In such a case then BTC price movements would be irrelevant because there is not currency risk. That retailers horde collectively is perhaps an indication that most feel it is undervalued and/ or difficult to obtain.
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