13 upvotes, 1 direct replies (showing 1)
View submission: Don't invest recklessly
From an economics standpoint, Bitcoin is deflationary and why I wouldn't spend it, maybe ever! It will only grow more valuable as there is less and less. Spend your fiat instead. Or another crypto that has less value.
Comment by [deleted] at 30/11/2017 at 16:17 UTC*
24 upvotes, 3 direct replies
Deflationary currencies can discourage impulse buys, but not purchases that are required to maintain your standard of living. The main difference vs inflationary systems is that people with savings wouldn't get screwed over by rampant inflation.
Hell, even GDP wouldn't suffer, because all that capital gains from savings would just be another source of income as far as the government is concerned. To offset reduced consumerism, corporations would simply hold savings and benefit from the deflation. The politicians would still get to point to growing GDP and pretend it was thanks to them, everyone would have the same or higher standard of living, but there would be less rampant consumerism filling up the landfills with crap. Merchants who sell less from reduced consumerism would still make up for it in capital gains.
This is what our society needs, as far as I'm concerned. Realize that happy, financially independent citizens are preferable to those living paycheck to paycheck whose houses are full of crap they don't use. I'm *very* happy that my bitcoins are there as a huge (if somewhat illiquid) emergency fund in case of god knows what, and I've bought gaming laptops, guitars, electronic components, VPN access, steam games, and god knows what else with them. I have no regrets.
And the actual deflationary rate of bitcoin is fairly low. The huge rise you're seeing these days is some combination of adoption and speculation and liquidity spikes. Not actually deflation. These are things that WILL become less pronounced as bitcoin truly goes mainstream and becomes more liquid.