240 sats \ 5 replies \ @fiatbad 26 Sep 2023 \ parent \ on: How do you consider volatility in Bitcoin payments? bitcoin
The more the supply chains are denominated in Bitcoin, the less this will matter.
You're talking about purchasing power going up and down in relation to fiat. But what if people stop caring about the relationship to fiat? What if the farmers price their base goods in Sats, and don't do fiat conversion at all?
Say a local farmer prices a gallon of his milk for a flat 100,000 Sats. Now, the local cheesemaker and the baker now know exactly how many Sats they need in order to source the milk they need to create their products. They can reliably price their products in Sats, not tied to fiat in any way.
I mean, this is how it works already with most foreign currencies. People aren't usually converting the Yen into dollars before buying something in Japan. That's insane. Yet, this is how everyone thinks when it comes to Bitcoin.... for some damned frustrating reason.
Bitcoin is only tied to fiat because we are making it so. This will change.
Volatility is not volatility in the fiat price, but in the purchasing power. You can remove fiat from the face of the Earth, but you can't remove milk or cheese.
As long as there is stuff to buy with BTC, it will have a purchasing power, and as an inelastic supply money its purchasing power will be subject to sources of volatility that are inherent in inelastic supply monies / assets.
Pricing stuff in BTC will stabilize it to some extent due to an anchoring bias.
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Ah, I see. Your original comment implied volatility because of global BTC demand and conversion rates to fiat. But if you are meaning volatility due to its inelastic nature, that's a different conversation.
A few thoughts on that:
First, that kind of volatility will only experience massive 20% moves overnight due to some major change in the goods/services themselves. So, if aliens attack all the milk farms in the world overnight, there will be volatility in milk the next day. This would happen even in an elastic-money world also, however. The Central Banks use their tricks to try to flatten the curve in both directions, so that price movements are less extreme. But they can only do that on a large-scale. They can't do anything about the price of milk, specifically, after my hypothetical alien lactose intolerance.
I think we've been brainwashed by the Keynesians on many economic topics, including the differences in elastic vs inelastic money. I think wild price swings will happen EQUALLY in both systems, as I explained above. And I think their ability to manipulate the curve is an overestimated, mostly non-existent benefit. We've never had the entire world on a single hard-money standard before. Where all the supply chains across the board are anchored by a single, inelastic currency. I think something like this would "flatten the curve" in the same way Central Banks attempt to do now. The wide distribution across multiple trading jurisdictions would remove the need for elasticity. The system would be large enough, and distributed enough.
Obviously, I'm speaking hypothetically now, because we haven't actually tried this as a civilization yet. But I hope I'm getting my ideas across well enough.
The tldr is: Elastic money supplies don't "reduce volatility" nearly as much as we have been 'sold' they do. This kind of volatility will be roughly the same in both systems. (In my opinion). Keynesianism is a hellofa drug.
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alien lactose intolerance.
brilliant example!
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I see what you're getting at, perhaps it's easier to explain this way:
When there is fiat, a whale can sell a large amount of BTC for fiat, causing volatility.
When there is no fiat, only BTC, it's impossible to dispose of a large amount of BTC, because there is no other liquid asset to sell it for. You can't spend thousands of BTC for megatons of cheese or milk, because there is not enough cheese, not enough milk and transporting / storing large amounts of these goods is problematic. In other words, there is no way to 'dump' BTC.
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LOL man, please go back to school to the economy classes. @fiatbad just explained you very well how is it, yet you refuse to understand. This stubbornness will push you to the dark limits of fiat slavery.
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