[ben_w]

From your link:

“Stability in value is presumed to be the decisive factor for acceptance. Hayek makes the assumption that competition will favor currencies with the greatest stability in value since a devalued currency hurts creditors, and an upward-revalued currency hurts debtors.”

Stability is not the observed behaviour in BTC.

[RestlessMind]

It is rather a promise of an "eventual stability". Thinking through that lens, I think USD (and other Fiat currencies) are the ones exhibiting instability.

[sytelus]

BTC cannot be stable, even eventually. There is no way to increase the BTC supply so when productivity increases, prices of goods (expressed in BTC) will always go up. Assume that BTC is the only currency and world productivity goes up 6% each year, or 0.5% each month. Then when you go in store to buy apple, you will see price gone up by 0.5% than previous month because there is no way to increase money supply. One of the advantage of fiat currency is that you can control the money supply and try to keep prices stable. For BTC, there is no way out either way. The worse case occurs when some economic disaster strikes like subprime mortgage. In that case there is no way to fix the issue and massive uncontrolled depression will trigger and can stay for decades whether you like it or not. In other words, the same things that makes BTC as good store of value, makes it a extremely weak to guarantee stable economy.

[ahnick]

If BTC is the only currency and everyone is transacting in BTC, then people are incentivized to hold BTC. Now that everyone is holding BTC, the value of their holdings are increasing alongside everyone else holding BTC. If you go into the store to buy items you will notice that the price in BTC terms will be decreasing b/c more BTC can't be "printed". (Each BTC is worth a lot now and continually increasing, but at a predictable rate) Each person will continue to pay with less and less BTC over time all the way until the lower unit bound, which is a satoshi (0.00000001 BTC), is reached. If we ever reach that point in our lifetime the code will need to be forked to upgrade the protocol to handle further subdivisions.

[noch]

> [...] all the way until the lower unit bound, which is a satoshi (0.00000001 BTC), is reached. If we ever reach that point in our lifetime the code will need to be forked to upgrade the protocol to handle further subdivisions.

No fork necessary. We can already use millisatoshis on L2.

https://lightningwiki.net/index.php/Denominations

[evilos]

That is deflation and is intentionally avoided by central banks because you don't want people to hoard their money. Hoarded money sits there and does nothing while money that is in banks can be lent out, invested, and be useful.

[ahnick]

It's only avoided b/c in traditional economies there is no way to subdivide units of a denomination. (e.g. There is no way to split a penny into thousandths) Cryptocurrencies are purely digital and do not have this limitation. The only limitations are self-imposed by the algorithms themselves.

If Bitcoins were the dominate and only currency, people would continue to buy food, clothing, luxury goods etc. b/c they need or really want those things and will be willing to trade bitcoins in exchange for those goods. Practically, Bitcoin is unlikely to be the dominate currency allowed in countries to participate in transactions without incurring significant taxes, so likely people will store wealth in Bitcoins(or other cryptocurrencies) and then convert to fiat currencies as they need to make their purchases.

[evilos]

The pool of valuable stuff and services grows over time, in general. There is a fixed amount of bitcoin to represent the value of all valuable things. Therefore in a world with only bitcoin, a bitcoin grows in value over time and is more like an investment than currency. This is like if interest rates were always stupidly high, because why lend out your precious automatically appreciating asset when it makes you money just by sitting there? If people struggle to get credit (by borrowing) it becomes super hard to buy cars, houses, educations, etc. Imagine paying a mortgage but with credit card rates. It would be very bad.

[ben_w]

That’s not the only way it’s avoided by fiat currencies. Physical units wear out and are lost (sometimes destroyed deliberately before that point, I don’t know how often); and the banks have rules on the use of fractional reserve banking and similar, which is for practical purposes a time-limited money multiplier, and the multiple of that multiplier depends on the rules: https://en.m.wikipedia.org/wiki/Money_supply

Fiat can, most of the time, grow or shrink the money supply as needed for the most stable economic outcome.

[andrepd]

Ahaha, I'm literally listening to a talk by Yanis Varoufakis right now and not 5mins ago he mentioned this as the reason non-fiat money, be it gold standard or BTC, cannot work long-term.

[PragmaticPulp]

There is no objective measure by which Bitcoin is more stable than USD.

The idea that USD is becoming worthless due to recent monetary policy, however ill-advised, is greatly exaggerated.

The idea that Bitcoin is the only way to protect oneself against inflation is also greatly exaggerated. Investors have been buying assets and investments for a long time before Bitcoin was invented to avoid inflation. Bitcoin didn't magically change that.

[coinward]

unexpected inflation is just so unexpected. its not that Bitcoin is the only option, its just the best option which is why its emerging as money

[coinward]

fiat is volatile and loses purchasing power by design. gross!

[coinward]

if you use BTC as unit of account then Bitcoin is the only thing that IS stable!

[ben_w]

May I introduce the concepts of the Consumer Price Index and of wanting to use money to buy things other than units of itself: https://en.wikipedia.org/wiki/Market_basket

[Jtsummers]

/s?

That's a nonsensical statement. Use BTC to buy a car today, and then use it to buy the same value car in a year. BTC is, fundamentally, unstable at this point in time. Even when all BTC is mined and it is distributed across the globe to every human being and sentient AI and animal, it will likely continue to be highly unstable as a currency.

Compare to the, relatively, stable USD as a currency. Prices for goods and services in USD fluctuate, but typically only changing once a year or so. Your milk price doesn't, in USD, shoot up by 500% in a week.

[scarmig]

It's all a matter of perspective. It's the entire rest of the world that's unstable and undergoing wild price fluctuations, while the value of one Bitcoin stands eternal and unchanging by virtue of it being worth one Bitcoin. /s

[coinward]

things should be getting cheaper with innovation and technology growth

[Jtsummers]

And many things are cheaper. Or they aren’t growing with inflation anymore. Most electronics, for instance, and many mechanical devices. Even food stuffs (some) have been more stable in price than inflation suggests they should be.

[CyberDildonics]

When people tell me they're cold, I remind them that 1 degree celsius = 1 degree celsius.