Everybody hates their cash dropping worth…however there is a large worry of deflation within the present financial design. Deflation means persons are gaining shopping for energy by merely holding money. This causes a droop in spending and a slowdown within the financial system. Is that this actually a priority with BTC? Who can clarify what this future appears like?
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It won’t.
you realize bitcoin is inflationary, right? every block currently creates 6.25 new bitcoin, a total of 900 per day.
as that reaches to 0, then fees are king on chain, and layers will handle the day to tay transactions, no longer inflationary or deflationary in practice.
Leads to a higher savings rate.
And idk it’s gonna be 30-200 years or maybe never before that happens on the society level.
For me, I just save a whole lot more than I otherwise would.
nocoiners will have to sell their assets to aquire bitcoin. we won’t accept fiat forever, you gotta trade me that car and it goes down priced in bitcoin each year.
the deflation started over 10 years ago. your car used to be worth 1,000,000 BTC now your car is worth 1 BTC
This idea is more a Keynesian one to justify inflationary fiat currencies.
it doesn’t apply to Bitcoin since it doesn’t operate in a vaccum, it operates as a counter point and shadow to fiat itself.
I don’t think anyone understands macro economics well. Let’s give it a shot and see what happens?
Are you going to stop buying food because it might be a bit less expensive *next year*? Not me.
Are you going to live outdoors because rents and home prices might be a bit less next year? Not me.
Are you going to stop using toilet paper just because you expect the price to go down a little a year from now?
Has anybody ever mentioned “critical thinking” to you?
Increases purchasing power for savers
Well, there’s never been a truly deflationary currency. Even specie currencies were all debased over time. What we do know is fiat is garbage, they started experimenting with it in the 70s and it’s a total failure.
> BTC becomes the main currency
Not possible. Bitcoin has capacity constraints which prevent it being that big
Everything gets cheaper over time.
i think it’s mostly fear-mongering to push excessive inflation that functions as a wealth transfer from poor to rich.
If there is no inflation the plebs wages will always go up in real terms.
Can’t have that. We need starved wage slaves that have to work more and more to survive.
Deflation is only a problem when it is high. Bitcoin will always be slightly inflationary at worst slightly deflationary.
The negative effects of deflation that are often mentioned to terrify people weren’t due to a deflationary currency.(e.g. Great Depression)
There have been many periods in history where there was slight deflation and the economy was just fine.
we already have deflationary goods such as electronics. Have you ever thought about not buying a TV because it gets cheaper over time? Did people stop buying electronics because they always get cheaper over time?
Of course excessive deflation can be bad just like excessive inflation is bad.
This kind of thinking comes from keynesian economics school of thought, which is essentially central bank propaganda. The claim is that deflationary money will reduce spending and crash the economy. The guy who developed this school of thought, British economist John Maynard Keynes, did so in the 1930s – he had no formal training or education in economics but he had a prestigious position in the British Treasury.
With Bitcoin as a deflationary monetary good, yes spending is reduced in the present, but in the long term spending is actually increased. People still need to consume goods to live their lives today, and therefore will spend money to consume them.
For example, in 1980 a 1 MB external hard drive cost $3500, but today that amount is worth pennies. Yet, people have continued to buy and use hard drives for decades, even though their prices continue to decline.
When you consider making a purchase, you don’t compare the price to its expected future price. You compare it to the benefits you gain from purchasing it now in the present. If the benefit of buying today outweighs the benefits of waiting despite a price decline, you’ll make that purchase. Every person who buys a laptop or phone does so even though they would definitely get a lower price if they waited just one year. And yet, year after year, billions of people globally buy phones and laptops.
People want to enjoy and benefit from products in the present. If you just think about it for 5 minutes, the idea of needing inflation completely falls apart.
You see, deflation in a monopoly debt driven system based on credit is bad. Deflation in an economy based on sound money is perfectly healthy and normal. This is a big difference that requires a complete paradigm shift in your understanding of what the world would look like on a bitcoin standard.
In an inflationary system, where you know that in the best of times your money depreciates 2% a year and in the worse times depreciates even more, you are encouraged to spend more today.
But nobody spends everything today. We still save for the future.
In a deflationary system your money will increase in value in time. There is pressure to put off spending and save (gasp). But, if we still saved in an inflationary system, is there any reason to think we wouldn’t spend now in a deflationary system?
As for long term consequences – if there’s an encouragement to save, is it possible that we will develop stronger long term planning skills as an economy? Perhaps resulting in a more efficient allocation of resources?
Should cryptocurrencies take over entirely, new infrastructure would have to be developed in order to allow the world to adapt. There would inevitably be difficulties with the transition, as cash could become incompatible quite quickly, leaving some people with lost assets.
What’s the transaction cost $1.309 USD and confirmation is anywhere between 10 minutes and over a day later?
BTC will never become the “main currency”.
Not going to happen as it won’t become the main currency.
The wealth gap will continue to increase. And I don’t know what mechanism will fix that.
It means your boss will have to give you a pay cut each year.
As I business owner that thought of trying to explain this to staff scares the shit out of me. ????
People buy what they need and the society adjusts. People work less and save more. Lower paying jobs become able to support a person. The grifters that mooch off the government get real jobs and support human flourishing.
I’ll never understand why people think Bitcoin will become a widely adopted currency.
First, that future is very unlikely.
But to answer your question: people don’t need a motivation to consume. You will always want a bigger house, a nicer car, a more luxurious holiday. So if the only money there is is a deflationary one, it doesn’t there’ll be negative growth. People always want to consume more.
In an inflationary economy government spending is easier, that’s all you need to know.
Would it really be that bad if people only buy what they actually need instead of frivolous spending?
There are ways around that.
If we really truly are concerned about climate change, imagine what having a currency that incentivizes less consumption would do.
It will be harder to get loans, but I think deflation will be good overall. Money might actually be allocated properly, instead of frivolously spent by the government.
No more endless war. .gov will only be able to spend what they actually tax. It will be smaller and more responsive to the people.
People will be more productive, if you want to eat you must first produce.
Saving mentality will prevail.
No more Cantilion effect.
We’ve been fed the fiat lie for our entire lives. We’ve been told that the only way that people spend money is if the value of your money is eroded by ~2% every year.
After hyperbitcoinization is here, people will have to produce goods and services that actually have value in order to earn bitcoin. The days of getting endless loans to prop of zombie companies will be gone.
Society will abandon the gluttonous consumption that is all over social media and TV. Obsession with social status of fake Instagram posts and the “Kardashian Lifestyle” will fade away as real value will be the only thing that you can do to get bitcoin.
Bitcoiners will be able to buy up real estate and land for pennies on the dollar as the fiat Ponzi scheme of fiat lending collapses in on itself.
Food, water, shelter, quality healthcare, and quality relationships will become the focus of society. No more cheap impulse buys at checkout lines.
Small mom and pop stores will flourish as they are the lifeblood of real economic growth. Big box stores that rely heavily on access to cheap capital will fade away.
Quality food will become the standard as factory farming and government regulated processing becomes a thing of the past. Pasture fed meat will rise and organic farmers markets will become much more commonplace.
Healthcare and food are re-joined and drug prescriptions become obsolete as healthy REAL food solves most of our health problems.
Basically, all aspect of life for normal people will improve. All of the parasites at the top that have access to cheap capital that is printed out of nothing will have to find a way to produce something of value or get left out in the cold.
The entire global economy will be different and it will be the greatest transformation of opportunity in all of history.
That’s what a Bitcoin standard future looks like.
People still need a recurrent income to live, and holding bitcoin, no matter how much you have, will not give you that.
It heals the economy. People will always buy what they need and want, but unlike today, they won’t buy things they do not much need just because they have to throw the money somewhere to avoid losing value.
Bitcoin is not deflationary. It is disinflationary.
Less trash, less garbage products, less pollution…
I find that worrying about what will happen with today’s technology 120 years from now is not the best use of time.
In 1900, people were getting all worked up about how the horseless carriage could never attain true adoption for so many reasons, including how horrible traffic would be once just 10% of the people in a town owned and used one, it would be “gridlock” and the horseless carriage would become useless.
They couldn’t even imagine road networks of modern times and how automobiles would evolve then, and we have no clue and can’t even imagine what Bitcoin will look like that far into the future when it becomes truly deflationary.
Simple: degrowth (which is necessary)
When inflation is within a certain range (ie a couple percent inflation or couple percent deflation), the average consumer doesn’t think about inflation when making purchases. Why would you?
It’s way more likely that I’ll be spending some of my “money” knowing that in the not too distant future that the increase in value of that “money” will mean I won’t have lost anything by acquiring that thing.
It will make it harder for people who don’t have any “money” to catch up, but maybe the improvement of the economy will mean better outcomes for everyone.
The idea that you have to inflate money to keep people spending is ridiculous. People buy things because they need them or want them. People will always buy things, regardless of the nature of the money supply.
Second of all, when Bitcoin is the global reserve, it will deflate at exactly the rate that the global GDP increases. Global GDP has historically increased by roughly 3% per year on average. So the fact that your money will be worth roughly 3% more in a year will not exactly be a monumental factor in whether you would make a given purchase.
Thirdly, when it comes to non-necessities there will always be a time preference. (Everyone has to purchase necessities in the present). You will always prefer to have things today instead of in the future. If you’re intending to buy a new car, would you wait a year to get it for a 3% discount? Some might, but it’s definitely not an overriding compelling force.