Comp Sci prof who doesn't think much of crypto

[trade4succes]

Part of what I thought the value of crypto was that it could be used as a currency, but how do you do that if it continues to fluctuate wildly? Can a business really afford to take payment in crypto and see it drop a few thousand in value, or more? Or the guy who bought pizza with his crypto, do you buy something and then watch it skyrocket.
When will it stabilize or will it? An investment in hopes of an increase, I guess. That is a choice someone can make, but right now as a medium of exchange a business would have to be nuts to take crypto. They have inventory costs, etc. that they can't afford to take even short-term losses on it while waiting and hoping for it to come back.

the value of crypto was that it could be used as a currency
that's the only thing I have heard that has some merit in this regard. If it were used as such, people might want to keep a portion of it in their wallet ready to spend. Such as a checking account or cash. All those portions together is a lot. This amounts to real long term demand or value for BTC. Then again, the deflationary nature of BTC by itself already makes it unsuitable for use as currency. If it were made inflationary, there would be innovations I imagine (it's crypto afterall) to make this need for portions go to zero.

 

[NoahA]

Then again, the deflationary nature of BTC by itself already makes it unsuitable for use as currency.

Why do you think a currency has to be inflationary? Its a complete lie. Every currency has of course always been inflationary, but look at how it always ends... worth nothing! The reason for making currency inflationary is so that the regime, culture or state issuing it can steal from the users.

 

[Pekelo]

Why do you think a currency has to be inflationary?

Because a deflationary currency encourages HOARDING, that stops economic activities. Why would you buy a pizza for 5 BTC when you can buy 2 MM pizzas in a few years? See how it doesn't work as currency?

 

[Millionaire]

Because a deflationary currency encourages HOARDING, that stops economic activities. Why would you buy a pizza for 5 BTC when you can buy 2 MM pizzas in a few years? See how it doesn't work as currency?

Or how these greedy crypto nuts really think.. why spend my 1 BTC on a Honda today when i can buy a Lambo in a few years time.

 

[Pekelo]

Or how these greedy crypto nuts really think..

It is not just them, it is simply the nature of the beast. If your money is going to be worth 20% more in 6 months, whatever you buy today with it, you are over paying by 20%.

It is simple math and economy, and that is why deflation is not good for a currency. Slight inflation is the preferred target, it stimulates economy, because investing is better than just putting your savings under your mattress.

Crypto fans fail at everything, math, economy, security, psychology, etc.

 

[Millionaire]

Slight inflation is the preferred target, it stimulates economy, because investing is better than just putting your savings under your mattress.

Maybe Shitoshi should have added that to his original design. Increase supply of bitcoin by 2% every year forever, maybe even by 2.5% (because some get lost).

 

[Pekelo]

Maybe Shitoshi should have added that to his original design. Increase supply of bitcoin by 2% every year

He did. The supply is increasing (and will do so in our lifetime) so technically speaking bitcoin is inflationary by design. Practically it hasn't been because the value kept going up, but that wasn't intended.

 

[M.W.]

Putting money under the mattress would be fine IF there was no inflation. Inflation is the result of greed, in the end. The capitalist model is beholden to shareholders who ever demand more. That's why most companies and products over time become more expensive while the quality of the products drop, called profit squeeze. Neither the Fed nor politicians control inflation nor cause it, they just adjust to under and over shoots as a result of fear and greed. One thing inflation NEVER did is to inspire innovation or productivity.

It is not just them, it is simply the nature of the beast. If your money is going to be worth 20% more in 6 months, whatever you buy today with it, you are over paying by 20%.

It is simple math and economy, and that is why deflation is not good for a currency. Slight inflation is the preferred target, it stimulates economy, because investing is better than just putting your savings under your mattress.

Crypto fans fail at everything, math, economy, security, psychology, etc.

 

[Pekelo]

One thing inflation NEVER did is to inspire innovation or productivity.

Incorrect. Open any economy book and you will see a 2-3% inflation is healthy.

" Many economists, business people, and politicians maintain that moderate inflation levels are needed to drive consumption, assuming that higher levels of spending are crucial for economic growth."

https://www.investopedia.com/ask/answers/111414/how-can-inflation-be-good-economy.asp

 

[M.W.]

Some outdated economics textbook are your yardstick? Not mine. Common sense and studies of history are. Japan has experienced deflation for 20 years and yet they innovate and are at the forefront of technological discoveries and the translation into top notch products and services. They are the same export powerhouse they were 20 years ago. You are caught and stuck in spurious correlation.

Incorrect. Open any economy book and you will see a 2-3% inflation is healthy. Japan has experienced deflation now for 20 years and yet they are the same export powerhouse they were 20 years ago.

" Many economists, business people, and politicians maintain that moderate inflation levels are needed to drive consumption, assuming that higher levels of spending are crucial for economic growth."

https://www.investopedia.com/ask/answers/111414/how-can-inflation-be-good-economy.asp