Post
Topic
Board Altcoin Discussion
Re: Monero Economy
by
aminorex
on 16/07/2014, 20:14:21 UTC
Currency cannot behave like currency if the value constantly trends upward.

Gresham's law is supply-side driven.  If the demand side rejects your bernankebux, the law no longer holds.  By the time BTC is big enough for the economics peculiar to it to have a significant impact on the global economy, we are very very near the singularity, and no one will accept an inflationary currency.  Until it gets pervasive, global, it's not a problem.  When it gets pervasive and global, its not a problem for a different reason.  

If you hold 100 USD, and 100 mBTC, and the mBTC appreciates rapidly, while you spend all your depreciating USD, then soon you have no more USD to spend.  Your reserves are dominated in mBTC, and you must spend mBTC perforce, for lack of an alternative.

Coase's theorem indicates that distribution of BTC will tend to optimal.  That implies that the flows required to optimize the productivity of the distribution of capital (which are exactly the flows which are most productive) will occur.

There are numerous directions to come at this, but they all have the same conclusion:  BTC will tend to circulate to the degree it is beneficial to circulate BTC.  

When your liquidity is infinitely divisible, there is never an insufficiency of liquidity.

My take:  XMR needs to bootstrap.  It can't bootstrap if no one will take it.  If it is inflationary, no one will take it.  The only way to get people to accept an inflationary currency is to hold a gun to their head.  Crypto has no guns.