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by gmueckl 2967 days ago
As the proliferation of newly created digital currencies should tell you, printing new bills at will has been replaced by creating new currencies at will. So a series of new bills in the old system is now equivalent to a new blockchain. While we have thus the well perpetuated illusion of an ever fixed amount of currency, the system moves towards massive inflation due to an incentive to create new currencies.
2 comments
bitreality 2967 days ago
The incentive to create new currencies has really only taken major effect over the past year. Up until then, the term "ICO" hardly even existed. Since that time we've seen a goldrush to launch separate blockchains and sell ICO's.

But that's just a natural by-product of crypto currency's evolution. The amounts being raised in ICO's has been steadily decreasing. In summer 2017, you could raise $100M on a half decent project. Today, you're lucky to raise $10M. Investors are also demanding more transparency and deliverables from the projects.

This trend will continue as the market matures. Fundraising will continuously become more difficult once investors get burned a few times. This is all very new, people have no idea what they're doing. Eventually the fools will go broke and the smart money will remain.

The reality is that with so many scams / useless projects being launched every day, investors need to do more and more research to get positive ROI.

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DennisP 2967 days ago
It remains to be seen how that will work out. If your equivalency were correct, we'd expect the issuance of new currencies to reduce the value of old ones, and so far we're not seeing much evidence of that.

Hayek wrote a book arguing that a system of competing privately-issued currencies would ultimately result in currencies with stable value. Of course we haven't yet seen evidence for that either.

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paulgb 2967 days ago
> If your equivalency were correct, we'd expect the issuance of new currencies to reduce the value of old ones, and so far we're not seeing much evidence of that.

I'm not sure what evidence we should even be looking for here, but certainly the share of Bitcoin in the cryptocurrency markets has dropped alongside its value[1]. Anecdotally, most people I've talked to holding, say, ETH, would be holding more BTC otherwise, so it's hard to argue that the competition doesn't depress the price.

As for the Hayek reference, I have some thoughts on that: https://paulbutler.org/archives/stop-dragging-hayek-into-bit...

1: https://coinmarketcap.com/charts/#dominance-percentage

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