Quote from: timerland on September 03, 2018, 07:33:47 AM

Quote from: abhutra on August 11, 2018, 11:19:19 AM

I like the blogs published by Bitmex. One of the awesome sources to gather knowledge around cryptocurrency.

In this blog they discuss problem and benefits of deflationary economics. https://blog.bitmex.com/bitcoin-economics-part-3/

To quote from this:

Quote

However, even if Bitcoin has solved this economic problem, perhaps its naive to think Bitcoin would result in a more prosperous economic system. Bitcoin is a new and unique system, which is likely to cause more economic problems, perhaps unexpected or new ones. After all there is no perfect money. It just may not be correct to apply the traditional economic problems of the past, to this new type of money. Although it may be more difficult, identifying Bitcoins potential economic problems may require more analysis and a stronger understanding of the underlying technology.

I agree that it's a new kind of monetary system and it would have it's own problem when it becomes well adapted. but economically speaking do we need this system adding to the complexity already existing financial system.

If bitcoin was to just be an alternative currency in the future to existing world fiat currencies, then there is really no problem with it being deflationary whatsoever, or having a stagnant currency supply for that matter.

Prices would theoretically simply continue rising, as bitcoin would represent essentially approximately the same underlying real value, but with fiat depreciation, would increase in nominal value. This has nothing wrong, in my opinion.

If bitcoin was to become the single dominant global currency, then it's probably a different story. We don't know what's going to happen, since there simply has been no precedents before with a controlled disinflationary currency. However, what we do have is the advantage of such currency, as it's not based on debt, and has a stable supply - meaning that depreciation would not occur like it does on fiat currencies.

That is something I so much believe would really be the case eventually. A lot of people complain about deflation but have failed to realize that the currency aspect of it is not being utilized very well and there is just so much the market can go in the case of it just being a speculative asset which is what would subject it to more manipulations in the long run.

As far as I am concerned, as long as this currency aspect becomes utilized fully in the long run, it would even be more appealing than fiat and would make the idea of mainstream adoption as currency even more interesting.