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1255 sats \ 0 replies \ @Undisciplined OP 6h \ parent \ on: Is increased merchant adoption reducing bitcoin's purchasing power? econ
Alright. Time for some unpacking.
True, but just because we can't know until then doesn't mean it wasn't a real preference shift.
Also true. This is purely cheap talk and has no market relevance. Oftentimes, you'll see people say there must be a willingness and ability to buy or sell. Personally, I just find statements like the one in your example confusing and meaningless, because I think they contain about bunch of unspecified implied assumptions.
Remember, though, that the vast majority of supply or demand curves exist well outside of the range of current market prices. They are mostly counterfactual sets of market outcomes.
Correct. Even though, I've been trying to be clear about what supply and demand are, I think I may have introduced some confusion by not distinguishing between individual and aggregate supply and demand.
We each have our own demand schedule for all goods and services on the market, and no one knows exactly what those are, including ourselves, but there is some quantity of each thing that each of us would purchase at any given price. Aggregate demand is the summation of all of those individual demand curves.
It would have been clearer to say that Steak n Shake's demand for bitcoin increases either way, but if they are immediately converting it, then that's less of a demand increase than if they save it. This is something we can infer from their actions, because when they save it they're signaling that they want bitcoin at greater than the current market price. "Why aren't they just buying it then?" I hear you asking. Good question, that I don't know the answer to, but suspect it has something to do with uncertainty or cash flow. A copout answer would be that they value it above the current bids, but below the current asks.
We do, but this is also where things get a little weirder. They became willing to accept bitcoin in exchange for "their delicious comestibles" when they had previously been unwilling to at any known price. That's a demand increase, but it's not necessarily a demand increase on the fiat-to-bitcoin exchange channel. Since they didn't simultaneously lower their comestibles' prices in fiat terms, we can rule out a supply increase as the explanation.
As with all of our related discussions, the weirdness really enters the picture because we're discussing competing currencies and so there's supply/demand in terms of each currency and available goods, as well as the currencies with each other.
Yes. Lots of stuff could be happening. Ad arguendo, I ruled out other motivations than just wanting to accept bitcoin. Everything else is assumed constant.
Yes, but as argued above that doesn't matter a ton, because we don't know most of the points on either the supply or demand curve (and those curves change with each transaction).
You can go down this path. Rothbard presents a framework very much like this in Man, Economy, and State. I won't be able to do it justice without some review, though.
To me, the central difference between supply and demand is that supply is how much we value things in our possession already and is thereby constrained by our inventory, whereas demand is how much we value stuff other people have and is constrained by our purchasing power.
You can collapse those into one concept by thinking of money as just another good in your inventory. Then, you might say that you're willing to supply 15k sats in exchange for increasing your burger inventory by one unit.
I can't say, but I do enjoy these conversations.