| > It's all fine and dandy until central banks lose control and inflation causes catastrophic issues. Genuinely curious: what issues are you specifically referring to? > BTC & ETH aren't deflationary as much as they are predictable in their money supply. See this is another crypto myth. So yes Bitcoin is limited to ~21M coins theoretically but we don't actually know what the limit is because wallets have gotten lost and will continue to be lost. Second, a lot of crypto people don't seem to understand the impact of derivatives to effectively increase the supply and thus bring about all the problems crypto advocates say crypto doesn't have. I mean look at GameStop. There are a fixed number of shares on the market (buybacks and issuing new shares notwithstanding). Yet derivatives created a situation where there simply weren't enough outstanding shares to cover short interest. Taken to its extreme this would mean those shares would have infinite value. What really undid the subprime mortgage market (other than the fraudulent ratings for which no one went to jail and they absolutely should have) was all the derivatives on top of actual mortgages. I forget the exact number but it was something like a factor of 10-20 (meaning $10-20 in derivatives for each $1 of a mortgage). The exact same thing can (and will) happen to crypto. That's why fixed supply is a myth. |
When central bank/governments lose control or get greedy you end up with hyperinflation. Should I go into examples of how hyperinflation has been catastrophic?
> we don't actually know what the limit is because wallets have gotten lost and will continue to be lost.
We know the limit but we don't know how much is being circulated. Central bank money is the opposite, you know roughly how much is being circulated (if you're government is nice to you) and there is no limit.
> The impact of derivatives to effectively increase the supply
Derivates don't increase the money supply itself, they play tricks using the underlying asset. If you hold the Bitcoin asset yourself, someone playing with derivatives means very little to you. Though if you have your balance on an exchange, that's on you.
On the other hand, in the current system, you have no access to the underlying asset. You don't own 0.00001% of the central bank. In other words, everything you are using _is_ a derivative. Even something as simple as keeping your money in the bank means you are using a derivative. That being the option of the bank to hold no reserves for the money you deposited.