0 sats \ 14 replies \ @didiplaywell OP 28 May \ parent \ on: The Paradox of Bitcoin Adoption bitcoin
The problem in your argument is that you use hyperinflation as an example of what can happen to bitcoin. That applies to fiat, not to bitcoin. Bitcoin can only lead to deflation if it becomes the unit of account of the economy. The volatility of fiat is due to it's cycles of emission and regression by imposed interests rates. Nothing of that applies to bitcoin.
You are conflating some core economics and you have to understand this, or else you are wasting your time in thinking up all these arguments.
Bitcoin will always be volatile, especially short term due to its rigid supply. Any change in demand will move its price significantly and vice versa.
And volatility implies high level of imperfect price discovery and market psychology, bitcoin is the same. That's why FX market is this liquid.
So no, you can never have Bitcoin with no volatility, it's literally possible because value is a derivative of different needs and wants for everyone.
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"Bitcoin will always be volatile, especially short term due to its rigid supply. Any change in demand will move its price significantly and vice versa." I'm not arguing against this, this is precisely what I proposed as a cause of the paradox of the idea of bitcoin becoming a base unit of account. We are saying the exact same thing.
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No it's not.
Your argument is that it will no longer be volatile once it become units of account for an economy.
I am saying Bitcoin will always be volatile, even if it become the ONLY unit of account (as currency) in the world because it will just make everything else equally volatile.
You cannot fix volatility.
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You are confusing two types of volatility. One is the volatility fiat suffers, which is always inflationary. The other is the volatility Bitcoin will have if becoming the base unit of account, which is the exact opposite, it's deflationary. There is no comparison whatsoever.
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Volatility is not a trend, it's called volatility because it is movements variance along the trend.
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Yes, exactly. My point remains the exact same.
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No because then you argument was on volatility and not trend.
And when I said trend, it is only on the supply side. Unless you think an economy running on BCH would somehow be deflationary as well.
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No, the trend makes for the volatility too. They are not unrelated. A trend towards a deflationary economy diminishes volatility. A trend towards an inflationary economy augments it. It's impossible to pretend to eliminate any possible trace of noise, that's for granted. And I never meant that. What I specifically stated was: volatility unbearable to allow full adoption.