Quote from: Auspician on July 05, 2013, 12:27:59 AM

Quote from: porcupine87 on July 05, 2013, 12:06:11 AM

Quote from: johnyj on July 04, 2013, 08:18:30 PM

This is a very interesting quesion since when people sell bitcoin for USD, it means they trust USD more than bitcoin

So why do people trust in fiat money, which is created out of nothing by the central banks?

Because when you have $500 in cash, you know, that you can buy in one year a better notebook with that money than today. With 5BTC you don't know. People want to plan. They want stability.

The only reason the price of a notebook computer goes down year over year is because of advances in industrial production - be it efficiency or merely economy of scale. Also, there is a tremendous amount of competition in technology, which means that the company able to manufacture a quality component for the lowest cost is going to be preferred. So basically, the reason the cost of a notebook keeps going down is a direct benefit of a competitive free market situation.

I'm aware of that. That does not change my statement.

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That said, the purchasing power of the USD overall is going DOWN year over year, DESPITE increases in efficiency and industrial capacity.

I disagree. You can't say that. In my opinion we have a light deflation, when the central bank wants to achieve a 2% price inflation level. That is, because of the calculation of the inflation level. How much costs a VW Golf 2 of the year 1990? 5 average month wages? And the VW Golf 7 in 2013? 7,5 average month wages? So the price for "cars" went up by 2% every year. I don't think so. You can't compare both cars. The newer car is simply another class of car. Much more comfortability, savety, power, efficiency and so on. So quantity went down, but quality rose. So want? Are cars cheaper or not. You can't say. How much money is the higher savety worth in ?

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But the truth remains - the purchasing power of the USD is very stable, and is decreasing at a very stable rate. The purchasing power of the BTC is much less stable, but is constantly increasing overall.

Yes, the USD is stable. Decreasing in value or not. It is relative stable. Whether you can buy 2% less or 2% more in one year, we could disagree. But that BTC is more worth in one year? Even for that guys, which bought at 250$/BTC? You don't know. Maybe one bitcoins sell for one $ in one year. You can't know.

I'm with my heart into the austrians economics. Really. But I'm still waiting for the prophesied apocalypse

(hyper inflation)

Hope that helps.

PS: Edit: I have a few over 1000 on an giro account, so no interests and the 2% price inflation. I want to buy lenses for my camera or even a new camera. But I wait. Why do I wait, when every euro on my account is decreasing in value? Because it isn't. If I wait, prices of lenses or bodies will go down, or newer better devices will appear. So for that particular need, my euros are definetly increasing in value over time.