[olalonde]

> deflationary (this pretty much means it would have a hard time to act a real "currency" based on nowadays economic thinking)

This argument makes no sense to me. If Bitcoin's deflationary nature prevented it from acting as a currency, it would also prevent USD/CAD/dogecoin/etc. from acting as currencies because people would chose to buy Bitcoin instead of spending their inflationary currency on anything else.

Every time you spend USD on something, you can instead buy an equivalent amount in Bitcoin. Not buying bitcoins can effectively be thought of as buying them and spending them.

In fact, the truth is that no one knows if Bitcoin will be inflationary or deflationary within the next year due to its current small market cap and risky nature. But in an hypothetical world where Bitcoin does become a stable and deflationary currency, why would any selfish actor chose to hold an inflationary currency?

[amscanne]

> If Bitcoin's deflationary nature prevented it from acting as a currency, it would also prevent USD/CAD/dogecoin/etc. from acting as currencies because people would chose to buy Bitcoin instead of spending their inflationary currency on anything else.

This is exactly what happens. No one holds currency.

People don't generally have their assets as cash, just what they need to be liquid. They hold their assets as a mix of stock (incl. funds, bonds, options), real estate, etc.

In fact, the majority of people have practically no cash at all because they lend it to a bank (i.e. putting it in a checking or savings account) who invests it or lends it for a return! The bank only holds a small portion of what they say is in the account.

[olalonde]

Not sure if you are disagreeing with me but in case you are: suppose those assets (stocks, bonds, real estate) could be transferred as easily as a currency (instant transfer/fungible/divisible/liquid/etc.), would people use cash at all? What would be the use case for cash? My point was that Bitcoin would be such an asset.

Perhaps a deflationary currency would have a negative overall impact on the economy, but that's not what I'm arguing about.

[amscanne]

I was disagreeing, but I don't think you are wrong: just misinterpreting.

I think that a good currency really has couple properties: fungible, no inherent value (i.e. not a good value store).

(This could be viewed as a weakness but I think is actually a strength in this circumstance).

If the currency is a value store, it changes the dynamics of spending it. I feel this is the reason that salt (going back in time) is not a particularly good currency either. Imagine it this way -- if all of a sudden salt was more useful (perhaps it's a hot summer, and meat is spoiling), then all of a sudden there's an extra inertia on all transactions, i.e. the cost of all goods changes.

The point of a currency is to facilitate transactions. If there's any sort of speculation around the inherit value of the currency (as per bitcoin -- the knowledge that demand will increase and supply will be lost) then it increases friction in spending.

I would certainly have to think a lot harder all the time if I were spending stocks or tiny pieces of land.

[olalonde]

> I would certainly have to think a lot harder all the time if I were spending stocks or tiny pieces of land.

You said it yourself: people don't hold cash. They sell their assets before buying something with cash. And it doesn't seem to prevent them from spending. With Bitcoin, it would be the same thing except the whole "sell your assets before you buy" process could be skipped.

Of course I oversimplified a lot here. People don't literally sell their stocks/real estate before they buy something. But I'm sure they would if those assets allowed them to.

[arethuza]

"What would be the use case for cash?"

To pay our taxes?