[bpodgursky]

Adding a few of my own peeves:

4. Bitcoin is inherently deflationary, which is an awful idea if you talk to anyone who knows anything about money

5. Bitcoin is fundamentally backed by pointlessly wasting CPU cycles and wasting energy trying to reverse hashes.

[jafaku]

4. Last time I checked, gold was still very valuable. And it has been used for what... Thousands of years? The economies of the world did just fine without forced inflation and consumerism.

5. Printing paper money wastes way more resources. And how is using energy to create something of value a bad idea anyway? Bitcoin doesn't even require that you use a contaminating type of energy, for all I know you could be hashing with solar energy.

[bpodgursky]

Most transactions now do not involve cash, and credit card transactions are in fact far more energy-efficient than bitcoin transactions. And it is not just using energy to "create something of value"--it is an artificial waste of energy barrier.

Furthermore, there will be an energy cost to transactions even after no substantial number of bitcoins are mined, since just verifying transactions requires wasteful hashing.

The solar energy part is totally irrelevant--if you happen to have a solar panel sitting around, you could just as easily use it for actual work (and offset coal burning) rather than computing hashes.

[jafaku]

> credit card transactions are in fact far more energy-efficient than bitcoin transactions

Huh? You seriously think Visa/Mastercard are using less energy than Bitcoin?

> Furthermore, there will be an energy cost to transactions even after no substantial number of bitcoins are mined, since just verifying transactions requires wasteful hashing.

You can call it wasteful all you want, but if you don't see the value in creating/maintaining a global framework for storing and exchanging value, then I don't know what to tell you. Besides, you are comparing apples to oranges. Bitcoin is a currency. You can build things like Visa around Bitcoin.

[dangero]

Gold being valuable isn't the point. In fact, I think calling bitcoin deflationary indicates the belief it will actually be more valuable in the future.

Question for you regarding your reference to forced inflation and consumerism: Do you believe there would be even a temporary economic collapse if the world were to suddenly move to a deflationary currency? If so, how many months/years would the collapse have to last before you would say that the transition to a deflationary currency isn't worth it?

The reason I ask is because while fundamentally I have a lot of problems with our financial system, I've come to the conclusion that historically there were periods of recession that lasted hundreds of years. I just don't feel that my lifetime in a bad transition economy is worth the sacrifice of moving to a "better" financial system. I'd rather just keep the status quo as it slowly degrades to something worse and worse since I think that's the best outcome for me. It's a selfish outlook, but I have to believe it's the outlook of most people and that's why we are where we are right now.

[retrogradeorbit]

re: 4. Deflation is bad for the asset rich, but good for the asset poor. Inflation is good for the rich and bad for the poor. Those who usually spout the 'inflation is better than deflation' argument are the rich.

The argument that inflationary expectation is better than deflationary expectation because during period of deflation purchasing stops because 'it will be cheaper tomorrow' is flawed because such periods of deflation are short lived, and the market returns to a price where people are willing to re-enter the market and purchase to gain utility from the goods and services.

Just be careful believing people who "know anything about money" without thinking it through.

For more: http://www.zerohedge.com/news/guest-post-if-you-want-help-po...

[scythe]

No, deflation is bad, period, for the economic actors who depend on deflationary currencies, and this is verified simply by looking at pretty much any historical instance of deflation.

http://en.wikipedia.org/wiki/Deflation#Historical_examples

Notice how nothing good ever comes of deflation? That should be a hint. I would be highly suspicious of the unsourced "In Ireland" section:

http://byline.timetric.com/2010/11/25/ireland-deflation-debt...

though there were some upsides: http://marketmonetarist.com/2012/08/14/good-deflation-the-ca...

I'm not against Bitcoin per se, but all this anti-inflation crap is, quite simply, at odds with historical data to the point that it has become essentially "views differ on shape of planet". If economics is to be useful at all, it has no choice but to be empirical, and everything we've ever measured has always told us that deflation is bad.

Perhaps Satoshi simply felt it was easier to implement finite Bitcoins than a constantly increasing supply. I don't think he can be blamed for that. Bitcoin is, if nothing else, certainly intriguing.

[jafaku]

You are confusing the short lived deflation that could be caused by a deflationary currency, with the deflation caused by all the other problems mentioned in the wikipedia article, like "technological progress that created significant economic growth", "great advances in productivity", etc. Apparently the only problem brought by gold and silver was that there was a scarcity of coins (a physical problem), which would never happen with Bitcoin (a digital currency).

> Perhaps Satoshi simply felt it was easier to implement finite Bitcoins than a constantly increasing supply. I don't think he can be blamed for that. Bitcoin is, if nothing else, certainly intriguing.

No, he was against inflation. In the first block of the blockchain, he added a message; it was something about Bernake approving a new bailout for the banks.

[phaemon]

> No, deflation is bad, period, for the economic actors who depend on deflationary currencies,

USD (or GBP or AUD etc) are deflationary relative to technological items, such as computers. By your theory, no-one should buy such items. In reality, they do.

I think this shows your theory is wrong.

[bpodgursky]

You absolutely have 4 backwards. Deflation is good for those rich enough to have money sitting around, and who can make money just by sitting on it and not investing it. Inflation is bad for the rich because suddenly they have to DO something with the money, or it disappears.

[jafaku]

Inflation is good for the rich's income. Deflation is good for the rich's savings. Seems like they win in both cases? Though I would argue they win more in the first case, since inflation don't necessarily force them to do something with the money. Eg: They could just sit on gold or real estate if they wanted to. But most rich people didn't get there by doing nothing, so they tend to do something anyway, no need to force them.

[Gormo]

A deflationary currency can be a bad idea as a monopolistic currency.

But adding a deflationary currency to an ecosystem that also contains inflationary currencies isn't the same thing as having a deflationary currency be the only currency available.

[maged]

5 is pretty equivalent to the mining of precious metals (well those with no practical applications).