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Author Topic: What's to stop inflation of currency when you have multiple digital currencies?  (Read 555 times)
Galahad (OP)
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May 21, 2013, 03:43:42 PM
 #1

I like the idea that Bitcoin and related currencies will stop wars (or at least limit them down to very small ones). But this idea is hinged on the fact that you can't inflate the currency to pay for it right? But what if other digital currencies come about? Each one grows to some degree so can't that be used to finance such things?

I realize that I know very little about this subject but it's just something I've been thinking about.
Birdy
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May 21, 2013, 03:49:07 PM
 #2

If you had to choose between the established Bitcoin and a random new coin to put your money in, which one would you choose?
There are already a lot of alternative coins, but unless they bring something new to the table they aren't gonna inflate Bitcoin that much.

But if there are some real competitors (like being backed by a Government or offering a new benefit) it could inflate Bitcoin.
Lethn
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May 21, 2013, 03:54:22 PM
 #3

There will certainly be people who will make inflatable currencies and that most likely will affect the market somehow, but I think the main point of the whole crypto currency experiment is that now everyone has choices and there is market competition in currencies when before there was not. With this we'll be able to finally prove what the best economic theory will be, I think the main thing I'm happy about is seeing the current financial system thrown into chaos. If Bitcoin hadn't been open source for instance, then it would have been a completely pointless exercise, but that's because I take the view that we should have as many competing currencies as possible if we want to find out which type of economy works best.

We're in a very interesting time now where there's going to be lots of ways to experiment with economics without constant interference, enjoy it while it lasts Tongue
ManBearCoin
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May 21, 2013, 04:04:31 PM
 #4

Bitcoins are deflationary by having a cap of the total money supply.

Central bank's fiat currencies are inflationary as they can create as much as they want.

When you understand all central banks create their money out of debt and have to continually expand their money supply to cover the new debt they have introduced by creating more money ... then you get that they can only expand their funny money.

If a state got involved with a crypto currency they would screw it up ... but we don't have to worry about that as they only offer a top down centralized planning method for all of their solutions. The idea of people controlling their own future without their force would baffle them.

Bitcoin and other crypto currencies are created by the people, for the people which is a 180 of any fiat currency.
Galahad (OP)
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May 30, 2013, 11:33:56 AM
 #5

Cool answers, thanks a lot. I'm glad to hear there's no way they can interfere with Bitcoins in that way to any great degree.
JSMill
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May 30, 2013, 02:31:22 PM
 #6

Network effect
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