[daveungerer]

> Loaning someone an asset at 0% is always worse than holding the asset.

Exactly. My previous reasoning was indeed a bit muddied, but what you're saying now clarifies it. I don't disagree with your math.

There are so many logical contradictions in the concept, which is why I end up making silly assertions that you correctly pointed out. Instead, the argument should simply be that the rate of return on bitcoin, due simply to built-in deflation, and expressed in dollars, may or may not be so high that it always makes sense to hold the asset rather than use it as currency to buy other assets. In which case it can't function as a currency: contradiction.

Of course, I do believe the BTC USD exchange rate will be the dominant factor in determining prices expressed in BTC in the long term, but I'm sure plenty of people would disagree. If that does happen, a lot of this becomes theoretical - the worsening exchange rate will take care of the deflation.

Note I'm not necessarily for or against bitcion. Thanks for the discussion.