Hacker News new | ask | show | jobs
by coolspot 3309 days ago
I think it is not absolute value what defines a bubble. It should be relative. E.g. perceived value of an asset compared to it's real value/revenue/growth.
1 comments

To provide a context here - one of the key value propositions of BTC is real interest rate.

Cash real interest rate: 0% interest - 2% inflation through debasing currency = -2%

BTC real interest rate: 0% interest - 0% inflation = 0%

Note how this benefit of BTC is not bubbly by itself (growth expectation usually is - due to it being based on past growth)

Prices only remain flat (0% inflation) if no increase in productivity occurs.

2% inflation doesn't mean the currency has been debased by 2%, it means: if it has become x% cheaper to produce a basket of goods -- and the price of this basket of goods has increased by 2% -- the currency has been devalued by (2+x)%.

Producers are constantly competing to cut the costs of production, in order to gain market share at the expense of competitors, so I don't see how flat prices can be a reasonable assumption.

Increase in production increases supply, so prices fall -> deflation.

Yes, inflation can have other reasons than debasement (for example, productivity decrease) but this affects both types of "money" - fiat and bitcoin, so I left it out to keep it simple