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Author Topic: the legitimate case for deflation as a problem for btc 'adoption'  (Read 1124 times)
paulie_w
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June 03, 2011, 10:00:30 AM
 #1

in thinking about how online commerce works right now, pricing is pretty stable.

to make bitcoin work in that context, you might have to fix prices against another, more stable currency... is anyone doing this?

as much as i love it as a concept, that actually does seem to make bitcoin quite undesirable as a currency rather than an investment vehicle. but it doesn't seem to have any hope of stopping?

how could this work? could you use an idea similar to the brazilian URV to at least stabilize the perception of prices, and make it feasible to use in a commerce situation?

http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil
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bitoption
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June 03, 2011, 10:13:18 AM
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I think options are the answer. Hence my options site. A merchant could just price puts at or near the current price in whatever period inventory turnover occurs. This is akin to oil pricing volatility for large airlines, but I'm hoping that someone will write a really simple hook which lets merchants add in a 'hedge' fee to their pricing so they don't have to worry too much about it.

Web interface launching later today.
paulie_w
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June 03, 2011, 10:14:03 AM
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hey that's a cool idea if i understand it properly
Guy Inkognito
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June 03, 2011, 10:16:01 AM
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would be happy to discuss this. I just opened a thread about the economics point on Bitcoins
http://forum.bitcoin.org/index.php?topic=11582.0
bitoption
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June 03, 2011, 11:07:34 PM
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Update, https://bitoption.org has launched. It's in beta.
gigitrix
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June 03, 2011, 11:15:56 PM
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In the short term it's a bit of a problem, but I imagine bitcoin's deflation will settle once the "boom" phase as finished, and as the currency matures. There'll be a flat deflation of X% per year/month/whatever, and e-commerce/trade solutions just need to take this into account, and adjust prices once a day automatically.
TraderTimm
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June 03, 2011, 11:20:34 PM
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In the short term it's a bit of a problem, but I imagine bitcoin's deflation will settle once the "boom" phase as finished, and as the currency matures. There'll be a flat deflation of X% per year/month/whatever, and e-commerce/trade solutions just need to take this into account, and adjust prices once a day automatically.

Completely agree, the rates will stabilize and have none of the wild swings foreign exchange currencies do, just by virtue of the supply limit. Exciting times.

fortitudinem multis - catenum regit omnia
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