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August 23, 2011, 12:45:01 PM |
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In the long run, it would seem a rising value of bitcoins vs currencies is inevitable as mining activity slows down. So at some point, there has to a way of devaluing bitcoins otherwise bitcoins will become as useless as gold with respect to the world economy: a speculative drain.
One of the reasons why I suggest negative interest rates is the example of local currency experiment in Wörgl, Austria which had great success and rapid take up. They also used negative interest rates in its introduction. Perhaps the effect of discouraging hoarding and speculation makes into a currency that must be used.
GDP = Velocity of Money x money supply. negative interest rates should boost both parts of the equation.
And right now, surely we want bitcoins to be rapidly adopted?
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or is the reason for negative interest rate success in context of a local economy because it effectively devalues the currency and improves trade balance of a local economy? Which is why it worked in Wörgl? Wheras Bitcoin aims to be global.
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