Quote from: Qoheleth on March 20, 2013, 09:03:28 PM

Quote from: Mosper on March 20, 2013, 08:50:20 PM

The currency itself becomes more valuable per unit vs things being purchased with it rather than the items themselves decreasing in value/price. Same effect as deflation but taking place on the side of the currency instead of the goods.

In other words, the BTC/USD exchange rate is getting pricier right now, so people don't want to spend BTC?

Is there even anything that can be done about that?

It would have to be advantageous to spend BTC instead of USD to offset the chance that you're costing yourself money against future prices. For most things right now there just aren't any advantages to spending BTC over your country's currency.

Quote

Value goes up -> nobody spends due to hoarding
nobody spends -> value goes down due to the currency being worthless.

Do you think that it's at all possible that there could be an equilibrium here? Or do you somehow believe that the price will go up forever despite hoarding and no real use?

This is the crux of the issue because bitcoin's value is driven in majority by speculation rather than production or utility. I actually believe that bitcoin is due for another crash pretty soon as the recent growth has every characteristic of a bubble. I don't think it's going to crash and burn forever as I think people are invested financially and ideologically to the point that they have too much at stake to not prop it up but that it will see a large and rapid loss of value. There is nothing to hold the value of BTC against on its own that's why everyone pegs it to the USD in all transactions and why almost everyone who takes BTC does it through bitpay or some such service.

All of this aside an equilibrium is where you think the value of BTC will stabalize but given that people think it's going to be worth thousands or tens of thousands or more per coin we haven't begun to approach that.

Quote

You can also argue the same way about inflation.

Inflationary currencies drive people to hard "hard assets" like Land for example. Therefore inflationary currencies drive up the cost of actual object ownership (like factory / inventory space) that's an objectively bad thing for economies?

* not a perfect example but sufficient

Every economic system has its downsides and the goal is to find the one that works the best. Inflation is a necessity to an active economy so this is the lesser of two evils. Unchecked inflation can of course be disastrous but an inflationary currency is really the only option. Your wiggle room comes in how you manage/distribute it.

I still think bitcoin has its uses so I'm not all doom and gloom I just don't think it lends itself to the type of thing this business is going for...at least not yet.