[lowkey]

“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto, The Bitcoin Whitepaper.

What if I told you that the root cause of inflation is not the price increases, those are a side-effect. The real cause is that the value (aka purchasing power) of your money is being diluted by means of central banks printing money and stealing value from the populace over time.

70% of the US dollars that were ever created were created since the invention of Bitcoin. It is only natural that the real value of those dollars has fallen.

Inflation is theft by central bankers to pay for politician’s desires without openly increasing taxes on the people.

Bitcoin fixes this because no politician, central bank or corporation can ever inflate the supply over 21 million, nomatter what they do.

[davidgerard]

The article says "cryptocurrency", not bitcoin. There are 10,000+ cryptocurrencies - and both the trading markets and the payment markets are agnostic as to which token they use, as long as traders can make money and payments go through.

Anyone can make their own crypto, and they do - so cryptocurrency as a whole is hyperinflationary.

Bitcoin maximalists say, but bitcoin is first and unique in many ways. Certainly - but not in ways that the trading or payment markets appear to care about. The "banking the unbanked" proposal is much closer to the payments market - nothing about it seems to depend on bitcoin's special characteristics.

I note that you're proposing a bitcoin version of Austrian economics there, with the word "bitcoin" substituted for "gold" - but Austrian economics proponents have long noted this cut'n'paste cryptocurrency problem with the bitcoin proposition.

[DennisP]

Then you would expect the value of cryptocurrencies to drop like a stone and never recover, but it hasn't worked out that way. Maybe markets aren't quite as agnostic as you think.

Seems to me we're actually heading for the competing private currencies advocated by Hayek, who thought the result would be long-term price stability without the need for top-down control.

[davidgerard]

Crypto prices aren't showing anything like stability - I don't see at all how you could claim that.

Denationalisation of Money was arguably disproven by the ICO boom - it turned out that actual users just treated the shitcoins as proxies for BTC and ETH, and BTC and ETH as proxies for dollars.

[DennisP]

I said we're heading for that, not that we're there now. The demand for transactions is increasing at a rapid pace. I don't think it's reasonable to expect price stability with so much change in demand.

[davidgerard]

It's as, or more, volatile now than it's ever been. You're basing this prediction on no evidence and a theory you don't outline. How will more demand for transactions stabilise the trading price?

[DennisP]

Not more demand but stable demand. Transaction demand growth is still vigorous, as any look at gas prices can verify. I'm just saying Hayek might be right, if the underlying GDP is reasonably stable as he assumed.

But fine, I'll admit I have little to go on. Are you willing to admit the same? Because you're even further from the actual data so far.

[lowkey]

“Central banks debase currencies to discourage people from hoarding cash and using it as a store of value instead of investing it into productive assets.

So they claim. Could it also be that debasing the currency is far easier than taxation as a form of wealth appropriation since the effect is subtle and indirect?

[blueblisters]

Central banks debase currencies to discourage people from hoarding cash and using it as a store of value instead of investing it into productive assets. They are not perfect but they don't pretend to be something they are not.

Bitcoin claims it's a "currency" but almost everyone uses it like a store of value (HODL) because its value keeps increasing.

[imtringued]

>Inflation is theft by central bankers to pay for politician’s desires without openly increasing taxes on the people.

This is weird. Inflation can happen without any central bank activity. Regular banks can lend out money. People can spend their money faster. All of that creates inflation without benefiting the government at all.

[ItsMonkk]

Central banks set the interest rates that regular banks base their rates at. I don't know how you would de-couple those relationships.

Inflation like what we had under the gold standard is bad, it leads to currency hoarding. Deflation is bad, as it leads to all sorts of bad effects. And minimal inflation can also be bad, as it leads to higher asset prices if the velocity is dropping.

I've been working through a thought experiment where we have a cryptocurrency that ensures that velocity stays constant. It does so by enforcing a tax on transactions, where you lock in a transaction to occur at a certain time in the future, but you can pay for it to occur sooner. The more we are taxing, the more we can ensure that the economy is doing well, the more the money supply is allowed to expand.

I'm also thinking that PoW is an extremely bad model, and I would prefer to work with their proof-of-weather, where weather is determined by a combination of many different weather trackers that we can prove occurred but are unable to predict much ahead of time.

It seems to be a good model, but there's still a lot to think about.