Convince me I am wrong about these bitcoin themes \ stacker news ~meta

Convince me I am wrong about these bitcoin themes

3424 sats \ 41 comments \ @Voldemort 29 Feb meta

I see a lot of themes relating to bitcoin on this sight that I just don't buy.

First; to not consider the purchasing power of bitcoin. This is the 1 sat = 1 sat or 1 btc = 1 btc theme. Purchasing power of a currency is fundamental so to not consider it is a mistake. Right now, the easiest way to consider its purchasing power is to think about it in terms of dollars. This will never go away until there are generations who didn't get accustomed to the dollar. But again, thinking 1 btc = 1 btc is not even sound in my view. I don't think of dollars this way - I think of $1 in the context of its purchasing power and its marginal value to my overall net worth.

Of course 1 sat = 1 sat in the literal sense, but if that is the only way you think about it I am happy to receive as many sats as you are willing to part with.

Second; that deflation is good for a currency. I am not talking about a little deflation here or there, I am talking about consistent, year over year deflation. I would argue that this extreme deflation (or increase in purchasing power) of btc is one of its main barriers to ever becoming a currency. I'd be sick to my stomach if I bought a house with btc when its purchasing power was 1/3 of what it is today. Maybe someone has solved this, but what would a mortgage even look like?

I know the austrian economists like to scoff at the idea that people delay purchases when there is deflation, but I certainly would. At least for big things. I am already cheap, knowing I can make money by doing nothing means I would do nothing.

Anyway - I am not going to debate these topics in the sense that I want to convince you to think my way or make counter arguments to your points. I am simply hoping to better understand how the collective SN community thinks about these.

view all related items

10 sats \ 0 replies \ @CoinHead 29 Feb freebie

I think the one BTC is equal to one BTC statement is more about its finite amount then its purchasing power. One dollar is equal to one dollar, if you know in the future the Fed will print more, guaranteeing your dollar will be worth less. So that statement to me is trying to oddly say that each sat is finite because we know there are only 21 million bitcoin.

As to the deflationary hype, it’s multifaceted, gold and silver are arguably deflationary and I’ve known one person who purchased their house with silver and I don’t think they experienced any distress over bull runs. ironically we see lots of distress from folks unable to purchase homes now because of inflation. Not sure the answer I could give you, but even owning a home is somewhat deflationary as we see the equity increase. I think it’s just a part of economics we will always see. At the end of the day I’d rather have something increasing in value than decreasing.

271 sats \ 3 replies \ @nullcount 29 Feb freebie

In fiat money world, you borrow money to buy the house

In sound money world, you borrow the house to avoid investing in anything that isn't the most liquid good (money).

0 sats \ 2 replies \ @joda 29 Feb

So, everyone rents?

26 sats \ 1 reply \ @nullcount 1 Mar freebie

Many with mortgage in fiat world would still be tenants in sound money world. Many houses are underutilized as living spaces in fiat world. When an illiquid asset appreciates faster than the currency, the incentive to 'put houses to work' is less. Maybe there are fewer empty houses/rooms in sound money world.

59 sats \ 0 replies \ @joda 1 Mar

So people sell their houses for Bitcoin, which drives down prices of homes.

But demand for rental housing (from the tenants' perspective), drives up the cost of rent.

Since people don't want to spend much of their Bitcoin, houses are made smaller and cheaper.

Since wages go down, affordability for buying and renting goes down.

As for mortgages, why would a lender want to lend out their best appreciating asset (Bitcoin) to someone whose wages are declining, to buy a house that is losing value?

210 sats \ 11 replies \ @Undisciplined 29 Feb

No disagreement from me on the first point. Btc is a currency and purchasing power matters. Maybe the best counterpoint, is to say the particular exchange rate to USD isn't that important, because the dollar's purchasing power is declining.

On the second point, though, my argument would be that a deflationary currency (which bitcoin isn't technically) encourages savings. That means people are incentivized to produce more than they consume, which is pro-social.

113 sats \ 1 reply \ @Voldemort OP 29 Feb

That is an interesting point that the rate in USD is not that important. Almost makes me want to compare it to a fixed dollar amount just for fun.

I will think more about the second point.

0 sats \ 0 replies \ @anon 29 Feb

Bitcoin is inflating up until 2140. My guess is you’d only expect year on year deflation of goods, closer to this date.

It’s hard for me to even predict human action in this environment, but maybe purchasing will be heavily linked to cash flow ie. If you’ve got sats coming in, you’ll be more likely to purchase assets you want.

77 sats \ 8 replies \ @joda 29 Feb

If people are incentivized to produce, then competition increases and the cost of labor (and therefore income) go down. This has a deflationary effect on prices, as fewer dollars are chasing the same number of goods (or even an increasing number of goods).

36 sats \ 7 replies \ @Undisciplined 29 Feb

as fewer dollars are chasing the same number of goods

It's not fewer "dollars" with Bitcoin, though. The Bitcoin supply is growing, which is the definition of inflation. It is an appreciating currency, which means its purchasing power is increasing, but that's not the same thing as deflation.

You raise an interesting point about increased competition. I was thinking about it from the other side: delayed consumption means reduced demand, which also lowers prices.

31 sats \ 2 replies \ @Voldemort OP 1 Mar

The Bitcoin supply is growing, which is the definition of inflation.

I have never heard this definition of inflation. I have always used and understood it to be a function of the price levels, not the monetary supply.

10 sats \ 1 reply \ @Undisciplined 1 Mar

The meanings became comingled, but originally "inflation" referred to an increase in the quantity of money and price changes were discussed as the common outcome of inflation.

It's a somewhat archaic bit of economic history, but I do think the distinction is important sometimes.

31 sats \ 0 replies \ @Voldemort OP 1 Mar

fair enough - happy to use a different definition if it is the standard here.

77 sats \ 3 replies \ @joda 1 Mar

Ah yes my brain is still wired for fiat!

Another idea is that if you are a producer (say a craftsman or artist), then you want to get paid sooner than later (because your good or service will decline in price), so your incentive is to either get paid before you produce, or to cut corners and produce as quickly and cheaply as possible.

Quality production would have to demand a premium not just for the quality, but for the loss of purchasing power from not having the money. (Probably compounded by the need to purchases higher priced materials as inputs).

26 sats \ 2 replies \ @Undisciplined 1 Mar

you want to get paid sooner than later

With an appreciating money, you would want to get paid later, but at a price agreed upon earlier. It's the inverse of our fiat situation.

77 sats \ 1 reply \ @joda 1 Mar

If I am a craftsman, the price I can charge for a widget now is more than the price I can charge in the future (assuming Bitcoin standard).

I'm not sure why you'd ever want to be paid later, if the price is set. Isn't having the money now better than having the same amount of money in the future? Opportunity cost/time value of money, PLUS "not your UTXO not your Bitcoin"

26 sats \ 0 replies \ @Undisciplined 1 Mar

Yep. You're right.

I was thinking that the same amount of money will be worth more later, but since there are no significant storage costs, you would absolutely rather have it now and just save it for later yourself.

46 sats \ 0 replies \ @globalmerchant 29 Feb

As a small business owner (wholesale) importing, exporting, some manufacturing in Honolulu and contracted out, over the last four years I have been trying hard to work with suppliers and B2B customers in and out of the USA to accept Bitcoin as a payment to and from my business. 90% is out of the USA and the are easier to actually use Bitcoin sometimes. But we (customers, suppliers and myself) are already comparing to their fiat value converted to the USD.

This is my biggest issue, your 100% correct this is not changing overnight, this will be over years to come. I post a real time scrolling list on AUD, BTC, EUR, THB, YEN)

https://globalmerchant.io/pages/theory-versus-street-prices

Street prices referring to the goods. On Friday afternoons, I post different stock items with "street prices". I'm using ibexpay integrated on a shopify store, and yes it calculates FIRST from USD and converts to SATS. But my customers STILL refer/compare to their ccurrent fiat prices, as they are delaing with the rest of the World in communicating what is their selling price.

91 sats \ 1 reply \ @037447d9ca 29 Feb

1sat=1sat: Regardless of price the network still works as intended, zero downtime. tick tock, next block. deflation: disincentives consumerism, so it's not only good for you, it's good for the environment

10 sats \ 0 replies \ @joda 29 Feb

Bad for "growing the economy", stock prices, etc. People saving or postponing rather than spending means business revenue goes down, mass layoffs, service sector deterioration...

60 sats \ 1 reply \ @OriginalSize 29 Feb

The first is more of a fun fiction.

The second is fine. Past purchases put in today's dollar terms may be offputting but I'm a responsible adult so I don't beat myself up. Bitcoin could have gone up or to zero. The key is don't trade ALL your coins for that house.

0 sats \ 0 replies \ @Voldemort OP 1 Mar

That is fair that price could have gone to zero.

20 sats \ 2 replies \ @fiatbad 29 Feb freebie

Bitcoin's long-term inflation rate is asymptomatically 0%. The Federal Reserve's long term inflation rate target is 2%.

There isn't a whole lot of difference between 0% and 2%. Bitcoin is NOT deflationary. It's inflation rate is simply zero. Your house isn't going to depreciate rapidly. It also won't "rise" as quickly as it does under a fiat standard. Housing will simply be stable, and fair.

Zero percent is the perfect place to be to keep prices stable over time. This makes it more fair for the average citizen to "save up" for large items (like we used to do in olden days). Bitcoin prevents nation-states from purposely creating temporary inflation spikes in order to pay off old debt more cheaply or fund major wars without the public's consent. The pros of a decentralized zero percent inflation money far outweigh the cons... unless you happen to be part of the Cantillionaire class.

0 sats \ 1 reply \ @Voldemort OP 1 Mar

I have always understood inflation to be a function of price levels, not the supply of money.

The Fed's target is not to increase the monetary supply by 2% each year, it is to have prices increase by 2% each year. During a recession or just a general slow down and the velocity of money decreases, they increase the supply of money to offset.

0 sats \ 0 replies \ @fiatbad 1 Mar

Yea, inflation can be caused by supply/demand dynamics OR by a growth in monetary units in the system.

I think it would benefit society if we would use different terminology for these two things.

Do you find it unethical that a small group of people control the monetary supply?

After reading "The Creature from Jekyll Island", "Broken Money", and other related books, I'm convinced that humans having control over monetary policy will inevitably lead to morale hazard and be detrimental to society. Around 1913, this system was set up by the same Cantillionaire families whos entire incomes today is derived from inflating the monetary supply. (they were laying the groundwork for decades before 1913).

The 2% inflation is arbitrary, unethical, based on no data, and asymmetrically benefits the people who have the power to set that target.

36 sats \ 1 reply \ @03479d0ee6 29 Feb

1- I see it more like a meme in the sense that we believe that in the future we will price things in bitcoin. But yes bitcoin price does matter, it must increase over time, otherwise why would people hold it instead of fiat.

2-in btc terms yes your house would probably be worth less over the years yes, you would pay say 1 btc and after a few years it's worth 0.8 btc, good news is all other houses would also be worth less. So in theory if you sold you could afford a similar house. In fiat terms your house would still be worth more.

0 sats \ 0 replies \ @joda 29 Feb

Good point

60 sats \ 1 reply \ @SpaceHodler 29 Feb freebie

Purchasing power of a currency is fundamental so to not consider it is a mistake.

Sure. If the purchasing power didn't matter and it was all about the tech, there would no point in stacking sats continually as there would be no difference between owning 1 BTC and owning 100k sats; you could use the tech all the same.

I would argue that this extreme deflation (or increase in purchasing power) of btc is one of its main barriers to ever becoming a currency.

I see a lot of people becoming hung up on the SoV vs currency dichotomy. It's a false dichotomy, coming from the fiat world, where it's either one or the other. Bitcoin is a new beast and only time will tell what it evolves into.

knowing I can make money by doing nothing means I would do nothing.

If everyone does nothing, bitcoin's purchasing power won't grow. It can only grow when the same supply chases an increasing amount of goods, i.e. when there is economic growth.

Holding BTC will allow you to share in the global economic growth, but there will always be people wanting to work, to outperform those doing nothing.

Check out this X space, Enterprise Bitcoin: The Financial Economy on a Bitcoin Standard They discuss what the economy may look like on a Bitcoin standard and they talk about this particular issue, among others, incl. lending.

0 sats \ 0 replies \ @Voldemort OP 1 Mar

Thank you for the link!

10 sats \ 1 reply \ @Atreus 29 Feb

First; to not consider the purchasing power of bitcoin. This is the 1 sat = 1 sat or 1 btc = 1 btc theme. Purchasing power of a currency is fundamental so to not consider it is a mistake.

This is one perspective. Let's discuss another one! 🧐

Point 1 Macro-politically, the world's socioeconomic structure is changing. It is moving from one form of economics into another, and as it does so, awareness of bitcoin grows. The price, relative to bitcoin's scarcity, reflects their levels of that awareness and valuation. More of them are willing to trade in exchange for your bitcoin, and that reflects your buying power.

Point 2 That's all well and good 😌, but the point of this meme (proverb?) really is that it's regressive. The person thinking this way is still thinking and living in terms of the old standard and hasn't moved into bitcoin mentally. His bitcoin is truly static and unchanging in quantity, and it's only the human environment's recognition of what he already has, that's changing.

Both these guys exist in the current bitcoin "community" (this word is used firmly tongue-in-cheek), but the latter guy fully realizes the scarcity of his stored energy and is more inclined to work to increase it, which is a better use of his time than getting drunk thinking about how "rich" he's getting.

(This is also the "stay humble and stack sats" meme in a nutshell.)

21 sats \ 0 replies \ @Voldemort OP 1 Mar

This is an interesting perspective. I sure do enjoy getting drunk and watching my bitcoin portfolio increase though haha.

36 sats \ 3 replies \ @freetx 29 Feb

Agree
This is perhaps too big of a topic to cover as a comment, but a few notes

(a) For most of human history we had more or less deflationary currency (yes more gold was being found each year, but population growth was exceeding new gold discoveries)

(b) Yes, deflationary currency discourages spending, but it rewards savings. Society needs savings to actually function, this should be encouraged. (Otherwise we just become debt slaves)

(c) Deflationary currency promotes "own less things, but each thing should be better quality". So yes you won't buy a new car every 5 years, but your existing car will be expected to last 20-30 years. We currently live in a world packed with poorly made, disposable trash-products. As a simple example: Your grandmother owned 1 or 2 heavy cast iron pots / pans that lasted her whole life (and could be passed down). Now people buy cheap disposable pans that are worn out every 2 years. In a deflationary money system you will naturally gravitate to buy good products that last your whole life.

(d) Deflationary currency may promote new business models that dont exist today: Buy a new computer today and we will automatically upgrade you for free to latest model in 4 years time....

(e) Deflationary currencies dont force "investing", savings is usually enough. This ties in with self-custody as you really don't need 3rd parties involved in your financial life...just save currency and use later.

(f) Because of above, deflationary currencies removes "financial institutions" from the overwhelmingly important position they hold in political sphere. In effect their disappearance promotes better governance.

25 sats \ 2 replies \ @joda 29 Feb

Argument against (c): Higher-quality goods cost more than lower quality goods. If you can buy a 20ksat pan now, rather than the 100ksat one, you can "save" the 80ksat difference and it will increase your purchasing power in the future, presumably by enough that you can buy another cheap pan.

(d) is VERY clever!!

(e) this also discourages investing in productive ventures. Similar to how higher bond returns discourage stock ownership.

36 sats \ 1 reply \ @freetx 1 Mar

(c)

True.

Having said that, if you remember "lifetime warranties" used to be a thing and would probably make a return. My grandmother received a Le Creuset pot after the war in 1945, and by 1980 the enamel had worn off from daily use. She was able to send it to the factory and they re-enameled and sent it back for free. Doubt such a thing exist anymore....

(e)

I think it would encourage companies to return to dividend payments and the net effect would be to invest solely for cash-flow.

The idea of investing in a stock and earning 0% dividends is a very modern idea that leads to weird distortions.

One of the effects of this is zombie companies that hate their clientele yet still survive. If Disney was forced to attract investors based on dividends, they wouldn't be making "woke" kids cartoons that nobody wants to watch...

11 sats \ 0 replies \ @joda 1 Mar

Excellent points. It's so trippy, but fun, to think through the consequences in a hypothetical future that I probably won't even live to see!

50 sats \ 1 reply \ @joda 29 Feb

GREAT POST! This is the kind of stuff I think about and argue with economists about.

To your second point--

Firstly, by your own argument, development is disincentivized because developers would rather keep their money as it appreciates in purchasing power. Allocating capital is anti-productive to profit. So, new housing will not be built unless it is very profitable to do so. Therefore scarcity will drive up the price of housing until it is profitable to build.

Also keep in mind that prices of inputs are going down in Bitcoin terms: land, materials, labor. So will the developer wait indefinitely to build?

Secondly, banks are not incentivized to give the developer a loan to build, or YOU a mortgage, unless the investment will yield better returns than just HODLing.

So what do you think will happen?(honestly; I don't know): will people choose to be homeless and eat beans as their Bitcoin purchasing power goes up?

0 sats \ 0 replies \ @Voldemort OP 1 Mar

I don't know either.

Maybe it would become so common that it actually doesn't affect my decision making. I would want to save my bitcoin to have more money, but what is the point of saving it if I don't spend it? If btc purchasing power keeps increasing indefinitely (at least during my lifetime), I certainly wouldn't put off buying a house indefinitely. As many commenters have pointed out, I think the solution would probably be smaller houses and whatnot.

0 sats \ 0 replies \ @DiedOnTitan 1 Mar

Agreed that 1 sat = 1 sat is essentially meaningless.

As to your second point, I would add that part of why we have an out of control grotesque level of consumption, waste, and pollution is that the future value of money is less than the current value. "Cash is trash so better to buy something now than save for later when it will buy less." This is a notion we all somehow innately know without understanding exactly why - until we better understand how money works. I thank Bitcoin for waking me up to this.

Sound money does indeed make purchasing decisions MUCH more considered. And this is welcome in my opinion. Sound money will engender a renaissance. Craftsmen (and women) will focus their energy on creating tools and products that will last generations instead of manufacturing mountains of plastic crap that breaks in 5 minutes. We will buy only products that can be repaired or that are guaranteed for life, that are built to last.

Knowing that your savings will hold and increase in value in the future will completely eliminate profligate spending and insane ecology destroying levels of consumption - unless you are a fool. We will only consider buying something that will hold it's value LONG into the future. We will seek the highest possible quality and reject disposable goods completely. Sound money changes everything. And this is needed desperately.

0 sats \ 0 replies \ @Coinsreporter 1 Mar

Why would you be sick? You wanted a house, you bought it. The main reason to have and earn money is to spend it on something that you can consume. You're sick of inflation, that's okay but what had you done in case you're trapped into a cage of hyperinflation. Wouldn't you be sick again because of Fiat.

Comparing Bitcoin to dollars or fiat is sin in itself. You should rather compare it to Gold or Real-estate. Maybe that way you can digest the whole phenomenon behind bitcoin.

1 btc = to 1 btc only when we start putting price labels on products in Satoshis or BTC. We need to build a whole new economy around Bitcoin. I don't know how we are going to do this but this is the only way that can possibly eradicate the need of fiats.

But again, Bitcoin isn't designed in a way to put price labels on products. It's quite difficult with Bitcoin. However we can do it, if we apply it to everything.

0 sats \ 0 replies \ @alamino 29 Feb

I will talk about the second point.

If I want to buy a house and I cannot afford it, I will wait till I have the money OR, till the price falls and I can afford with my savings. Maybe I'll buy the house next year when the price drops a little more or buy a bigger house. Why wouldn't I buy the house if I really desire to? Well, maybe I will just live for rent and no problem too.

We already live this situation with smartphones... Each day they're getting cheaper and we are buying them. It is a stimulus to the companies make them better. Anyone, nowadays can afford a great mobile phone even with a few bucks.... Imagine a world where anyone can buy a GOOD house, even with a few bucks. Maybe that is not the best analogy, but it is definitely the point to understand a deflationary currency world.

We are so used to an inflationary currency world that a deflationary is a paradigm break...

0 sats \ 0 replies \ @Nuttall 29 Feb

If you can make dollars you will want to purchase in those dollars.

If you have Bitcoin and you can not earn dollars buying a house might be a good decision if your Bitcoin can cover the expenses and taxes of a home over your lifetime. If you can not do this then buying a house doesn't make sense because in the future your Bitcoin will buy 30 houses.

The Dollar is decreasing with money printing, non-actional reserve and debt to dollar creation.

Bitcoin is a way to take a tiny bit of FIAT and build generational wealth. Another principal in buying something with Bitcoin is using sats.

Sats are cheap now so you are just moving around tiny bits for things you like at your value for value price. As a vague for value receiver you save the majority and you send small amounts to your favorite value for value.

If you do make a big purchase like a house make a very low Bitcoin offer based on what that Bitcoin will be worth in the future.

"I'll pay 50,000,000 sats for this house as it will buy 30 of these in the future."

There are people who will offer a bag of cash for your home now. Totally undervalued but the owner gets cash that is a bearer instrument.

If you understand humans then that is the key to understanding Bitcoin and Fiat currency or any type of negotiation.