Post
Topic
Board Economics
Re: Limited coins and hoarding
by
Etlase2
on 04/11/2011, 21:02:02 UTC
Splitting hairs.  Gold has the potential as a currency and it has been used as a currency in the past.  It is generally not used as currency for various reasons as outlined in the post that your replied to.

Gold has fallen out of favor as a medium or exchange because
* it can be counterfitted relativley easily
* the amount of gold in coin can be altered
* it is difficult to have small units of exchange.  For example making a 1/1000th ounce coin would be inpractical.
* as a medium of exchange some value will be lost due to abrasion
* difficult to transport large amounts safely

Bitcoin doesn't have the issues that Gold has and thus would be a more viable global currency.

All of those issues are based on the actual metal and all are solved by using a currency backed by gold. Which, crazily enough, most of the world did until the great depression. Then the world stopped because it caused a deflationary spiral.

This won't happen in Bitcoin because (quoting the wiki) "The key difference is that people don't foresee a fixed cost (unit amount) that they must pay with Bitcoin." So that somehow prevents hoarding, obviously.