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I was reading an ebook, called Bitcoins: what they are and how to use them, the book says

... it would be a fools bet to take a promise to pay a debt in Bitcoins, as they will by definition, become increasingly difficult to obtain.

This doesn't make sense to me; just because the number of new Bitcoins being produced will decrease, that doesn't mean they will be harder to obtain, because people can still buy and sell existing bitcoin. The quoted text seem to imply that the value of bitcoin will always go up, or am I missing something?

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That is indeed what that author is implying, though I think his conclusion is wrong. Any good currency will increase in value over time, or ideally the money supply will increase at the same rate wealth is added to society, which would imply its value remains constant.

This is distinctly different for instance then the USD which is intentionally being rapidly inflated by the Federal Reserves quantitate easing policy.

Bitcoin does not match the rate of wealth creation, and coins become more difficult over time to acquire, but the same is true of gold and people have been paying debts in gold for centuries. Perhaps its a good thing to be a little foolish.

  • What exactly do you mean by value, because surely virtually all fiat currencies lose value due to inflation? – Dilitante Nov 18 '13 at 13:09
  • Inflation is not an inherent quality of fiat currencies. Inflation is a product of central banking policy. And by value I mean the buying power of the currency. A good measure of value might be how much energy you can purchase for a given unit of currency. – Loourr Nov 18 '13 at 13:49
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Having an inflationary money makes it easier to pay your debt.

Indeed let's think I give you 10,000 dollar today and you are supposed to give them back to me in 10 years. Let's say that this sum is fixed and you have to exactly pay me that in 10 years

If an inflationary policy is made by the FED then the price of objects will go up meaning that : - Today I can buy bread with 1 dollar - In ten years, I will have to pay 10 dollar to buy bread

This may seem wrong but it is okay because salaries of people is also supposed to increase. So the baker will receive more money and we all have more money such as we do not really feel the inflation in our daily life because there will be more dollar in circulation. The bills and the loans than banks and FED are injecting in economy.

So for you in 10 years it will be actually easier to pay your debt !

However with Bitcoin it is different ! Because no one will inject supply of bitcoin in the system and actually the total number of bitcoin decrease over time !

Therefore if I give you 10 000 bitcoin today (wahou!) it will be really hard to pay me back for you because in 10 years there will be less bitcoin than today !

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