Post
Topic
Board Politics & Society
Re: Isn't deflation theft, too?
by
cointrepreneur
on 13/06/2011, 18:36:30 UTC
Eh, I think B just failed to make a viable business plan. You can make a business that turns more profit than 100 Bitcoins sitting incubated.

Well yes this is a simplified thought experiment. If the answer is that it just can't ever happen then I suppose that is an answer.

But this is basically the way retail business work.  (1) buy from a wholesaler at whole sale prices. (2) sell to the public at retail prices.

A widget is some generic thing and the bitcoin prices are intentionally made up.  Depending on what it is and how fast you can sell the widget it is not implausible that the value of a bitcoin rises faster than the profit margin.  That means you are always paying more in bitcoins for the widgets than you are able to get anyone to pay you for them later. (because now a bitcoin gets you more widgets than it used to).

Of course this means that a rational person just doesn't go into business, but that is the point - a viable currency shouldn't punish people who go into business with it.

I am playing devils advocate here. I am pro-bitcoin. I do think this is some kind of problem that deserves a serious solution though. Maybe it means some kinds of businesses can't be done with deflationary currencies but others can. It's not clear.

Also, to be sure, person A who did nothing did not make any money. It's just that they still have 100 bitcoins.  They have more wealth because now you can get more stuff with one bitcoin.  The person who went into business has the same exact wealth as before, even though they lost a bitcoin.  So the paradox (apparent (but possibly not actual) contradiction) is that someone who does nothing increases their wealth relative to someone who goes into business.