Quote from: hugolp on June 07, 2011, 04:36:50 PM

Quote from: jon_smark on June 07, 2011, 03:24:55 PM

Consider the scenario where Bitcoin fails to get any sort of traction in the real world, its value ultimately implodes, and it ends up failing as either an alternative currency or as a store of value. Moreover, this scenario occurs purely due to market forces, ie, there is no government crack down or any action against Bitcoin by The Powers That Be. Perhaps it simply happens that tomorrow someone starts Inflato-coin, a digital P2P currency based on Bitcoin but with the "tiny" difference that instead of a hard-cap on the total number of coins, Inflato-coin has an inflation rate that asymptotically approaches 1% or 0% or whatever small number without ever actually being 0%. And it just so happens that Inflato-coin manages to overtake and eclipse Bitcoin.

There's no shortage of people warning on this forum and on the wider blogosphere that Bitcoin's builtin deflation may lead to the above scenario and thus ultimately to its demise. And I know there's a fair amount of Austrian School apologists in this forum who simply dismiss these warnings without further ado. But would the realisation of this scenario lead Austrians to reconsider their views on Economic theory?

(Obviously the dual scenario also applies. Should deflation turn out not to be a problem for Bitcoin's success, then inflationistas (me included) may need to revise their assumptions.)

There are plenty of examples of how price deflationary economies grow and thrive. In fact, it is inflation that stops growth because it creates malinvestments.

The problem is that keynesians ignore the empricial evidences and keep repeating the same nonsense. If Bitcoin works or it does not it wont be due to price deflation.

1 internet is worth 1000 internets. Bitcoin is a set of protocols as is the net. A crash would be an opportunity of a lifetime. All that would occur is a reboot with hindsight. It would be criminal to not take a ride on a much stronger project at flea market prices.