Quote from: proudhon on November 11, 2013, 05:35:51 PM

It's absolutely fair to raise the question. What I'm suggesting is that it's an open question. I think the deflationary argument against bitcoin is compelling. And, yes, it's absolutely possible that spending could drop drastically as the value goes up. But, here's a question: Has bitcoin spending dropped drastically as the value has gone up? What's so important about the future values of $500, $1000, and $10,000? It seems there's enough history now that we can scrape together enough data to make some preliminary judgments.

What's important about future values is people's reaction to increased ROI on their investment. The pizza scenario is a perfect example. If you can buy a pizza today for say 0.1 BTC but in a matter of days (or whatever) that same 0.1 BTC could be worth $200. Arbitrary numbers but I'm just making the point that people's willingness to spend something that continues to prove that it not only will be more valuable tomorrow but is actually designed to be that way, very well could stagnant spending. As ones confidence grows that Bitcoin will be significantly more value next month than today, spending them makes less and less sense, from a investment stand point. Which is obviously the point the article was making.

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For example, the value of 1 BTC is more than 400x greater than when I bought my first bitcoins in early 2011. Has spending decreased more than 400x? Has it increased? By how much either way? If it's increased, what are the best explanations for that behavior? I've read a lot of anecdotal evidence that merchants see increased spending during rally periods. I think it'd be a worthwhile project to investigate these claims more rigorously since they offer some early empirical evidence that empirically runs contrary to the deflationary argument's theoretical claims.

Granted, it's still early. Still, I'm not aware of a deflationary currency environment of this size from which to draw empirical evidence to either substantiate or contradict an old, and widely accepted economic theory.

I agree. I intend to do some digging myself. There has to be some scenario throughout world history to draw some parallels. I could of course be wrong in this. I would add that if the answer to the question is, "there isn't really answer until we get there and find out", that's both an exciting and scary dilemma.