At the time I begin writing this, I have seen fourteen (15) posts in this topic. Here, I'll talk about each I feel I should address here.
1 is just my own initial ranting.
2-5 aren't really comment-worthy.
6 is accusing me of trolling. I'm not doing this maliciously. I plead the n00b, by which I mean, I am new to this forum, so I have an excuse to be naive to this kind of thing.
7 was my asking people to give an actual reply. I made that one a little in frustration. Not very much reply needed.
8 is a one-word response to 7: "no".
9 says that the hoarding would mean the deflation wouldn't continue. I think the exact opposite: the hoarding would lead to increased deflation, at least until the economy catches up due to lack of capital. Bitcoin deflates --> Hoarding becomes safe + profitable --> People hoard more bitcoins --> Bitcoin supply decreases --> Bitcoin deflates more to compensate larger economy --> Hoarding becomes even more profitable --> etc. How is this logic flawed?
10 claims I'm trying to waste time. No. I want to understand so I can get a more informed opinion about bitcoins.
11 says people have debated my exact points ad nauseum. I read the topic post for the "last word" on deflation. I didn't find it helpful. It said economics is a social studies, said that Keynesian economics sees deflation as bad and Austrian economics sees deflation as good, and that you don't need to complain, just watch and see. Doesn't really address my complaints, but simply says different economic schools see deflation in different ways. What I'm looking for is for somebody to explain where and why my links in my chain are faulty.
12 again brings back the whole "troll" thing. I'm not a troll. I'm a naive n00b trying to learn.
13. Uh, this one isn't just one minor statement. I'll quote it sentence by sentence.
Deflation is not bad. It encourages people to save their money rather than spending it frivously.
If an economy sees little spending, it typically isn't seen as very strong. I agree that deflation leads to saving money rather than spending. But, as good as saving may be individually, an economy needs to see some spending to stay alive. Money socked away isn't doing anything but sitting there. Saving in the sense of taking money to a bank is an investment
. But deflation encourages saving in the sense of hiding money in a box in your backyard or under your mattress , i.e. hoarding. Hoarded money isn't invested: it isn't contributing anything.
It also makes borrowing money with interest harder, so only profitable ideas will get funding.
Like I said, but people could hoard so much it becomes virtually impossible to gain loans. I may be unintentionally exaggerating: I highly doubt the bitcoin would actually reach the level of hyperinflation the mark faced after WW1. I apologize. Touché.
Additionally, Could there not be things like fractional reserve lending, to mitigate the deflation.
I kind of thought that bitcoin would get away from the concept of fractional reserve banking like it got away from central banking. The two were very closely related. Well, it feels good to get rid of a hidden presumption I had. Besides, even FRB could only get us to a point unless me make the ratio of debt bitcoins to somniaurum bitcoins an infinite amount to one. And then the only difference between bitcoins and normal currencies are the lack of central banks in the former.
I invite you to watch the video "Money as Debt". It's ~45 minutes long, and really informative on deflation and FRB. It's available here]www.youtube.com/watch?v=Dc3sKwwAaCU[url]here
[/url]. The whole "fractional reserve banking" thing seems very fishy to me.
Computer memory is deflating, in a sense. You can get twice as much memory for your computer by just waiting a couple years. Why would anybody buy a computer now, knowing you can get a much better computer later? Because people want things now. Just like in the future, when bitcoins are deflating rather than inflating, people will continue to spend them to get stuff.
Dammit, I fell into the pitfall of replacing Homo sapiens with Homo economicus]rationalwiki.org/wiki/Homo_economicus[url]Homo economicus[/url]. I just thought that something like "hoarding your money in a deflating economy is safe [compared to investing] and profitable" is kind of obvious. When people used the gold standard, gold hoarding led to problems. I feel something similar would happen with bitcoins and the somniaurum standard. Touché.
On the topic of interest, it is possible to lend out bitcoins at interest because bitcoins can move more than once. They move from person to person, and so the total value transfered is higher than the total money available at any one point in time.
You lost me after the final comma. Could you please explain it in different words and/or elaborate?
14. Another detailed one.
Bitcoin is backed by the people offering goods and services for bitcoin, just like the US dollar is backed by people offering goods and services for dollars.
With the way it was set up, I thought bitcoins were backed by an imaginary substance, kind of like the gold standard but with gold replaced with an imaginary substance with only the value we assign to it. Hence my name for it, "somniaurum" from Latin for "dream gold".
If making money by just holding bitcoins is so easy, you should do it. You might find it is a bit more complex than that.
I just want to know what I'm getting into before I get into it. If my logic is flawed, I want to know. If I believe something which is false, I want to know. I want to have a rational discussion here.
Also, you should go read some basic introduction to bitcoins to see where they come from (here's a hint: there is a nice article on wikipedia)
read the introduction on the BitcoinWiki. I realize bitcoins have advantages. I just want to clear up any disadvantages so I can make informed decisions.
In regard to exchanging other currencies for bitcoins, at the time of the transaction neither currency is created or destroyed. If I trade 10 USD for your 3 btc, we did not create or destroy either bitcoins or usd.
Sorry, I'm oblivious as to exactly how any currency conversions occur in the first place. Another thing I'll have to look into.
15. I'll answer this one later, I'm a little tired. It's late where I am. I'll respond tomorrow.