Post
Topic
Board Economics
Re: Question for deflation advocates
by
MoonShadow
on 06/12/2011, 19:32:53 UTC
What is your opinion on the effect that a strong Swiss Franc has had on the economy of Switzerland? Don't you think that the same thing could happen to Bitcoin's economy?

Could you be more specific about what you are talking about?  From what I know, the Swiss Franc has been debased as much as the rest of the world.  There are a lot of things that happen that have little to do with the relative quality of the currency.

As for what can happen to a bitcoin economy, honestly we don't know.  The bitcoin economy is truly global, there is no 'currency friction' from floating exchange rates that businesses have to be aware of, at least if they stick to bitcoin.  This is not so for the Swiss Franc, for there must always be exchange into other currencies for trade.  In a world of floating fiat currencies, a rapid change in relative quality is generally undesirable because it upsets international trade.  This is the primary reason that the Swiss Franc is being devalued along with the Euro.  Bitcoin is sounder currency, but again, does not necessarily need to be exchanged for other currencies in an international trade setting.