Quote from: figmentofmyass on January 22, 2019, 07:36:46 PM

Quote from: deisik on January 22, 2019, 01:55:23 PM

I maintain that the concept of "sound money" is not a very good one, especially if we talk about a currency aspect of money (as opposed to its store of value one). But that's kinda obvious, provided you have a half-functioning brain and do not obsess with the idea of fiat being inherently evil.

"sound money" usually means either "not prone to sudden appreciation or depreciation" or "commodity-based money". why is that a bad concept? what prevents sound money from being useful as a currency?

paper money backed by gold or silver was used as currency ever since the 13th century, and quite effectively at that

It is not a bad concept on its own

It is just the forms of money you mention (gold, silver, paper money backed by precious metals) are not suitable for a quickly expanding economy (or just quickly changing economy, for that matter). In such economy commodity-based money constantly changes its value which may give an undeserved advantage to holders (aka rentiers) while discouraging producers, i.e. those who actually create new wealth and make our lives better (and a whole host of other issues which a good textbook explains in great detail). It worked for a few millinea simply because the economies back then were not growing so fast to make it a real problem. Most of the time they were not growing at all, so it was not a problem either

Quote from: figmentofmyass on January 22, 2019, 07:36:46 PM

Quote from: deisik on January 22, 2019, 01:55:23 PM

But I don't know how you are going to replicate in a cryptocurrency the capacity of fiat money to adjust its supply according to the needs of the economy (see the concept of endogenous money to better understand what I'm talking about)

why does the money supply need to be adjusted at all?

Because there is an optimum amount of money given the size of an economy (after bootstrapping the money). When the economy contracts or expands, money supply should reflect these changes proportionately, otherwise it will create imbalances. The supply of fiat money mostly adjusts on its own via credit, i.e. it has a built-in mechanism for such an adjustment

No known cryptocurrency can replicate that