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I once donated a few Bitcoin to a free software project. At the time 1BTC cost about one tank of gas. I sold the remainder when I doubled my investment and thou

I once donated a few Bitcoin to a free software project. At the time 1BTC cost about one tank of gas. I sold the remainder when I doubled my investment and thought I walked away lucky. Now 1BTC costs more than the car I’m putting the gas in. Oh well.

steve_adams_86 5y ago
Well, it required people like you actually using it to have any value in the start didn’t it? There had to be “losers” for there to ever be winners. But you’re not a loser because you still came out ahead. I’m not an economist or even an intelligent person, so this could be a terrible assessment of the situation.
- arcticbull 5y ago
  It accrues value specifically because people don't use it. Currencies don't skyrocket in value because it cripples the economy if that happens. In currency terms, it would yield a deflationary spiral. What happens is people save their currency instead of spending it, which causes retailers to lower the prices to incentivize spending. This in turn means they have less money to pay their workers, and they have to cut their pay and lay them off. This means the workers have less money to spend and the cycle continues. Even without a deflationary spiral, there's something called the paradox of thrift. [1] Something like 80% of Bitcoin hasn't moved in the last year. If we set aside the influence of USDT, the narrative you're pointing to would be that people are valuing Bitcoin more highly because of its utility as some form of currency - maybe, one day. In reality, due to its fundamental limitations and incentive structures (2-3 tx/sec), it cannot be a currency. It will always be the currency of the future, forever. [1] https://www.investopedia.com/terms/p/paradox-of-thrift.asp https://www.investopedia.com/terms/p/paradox-of-thrift.asp
  - tata71 5y ago
    Now explain DOGE.
    - arcticbull 5y ago
      Memes.
      - tata71 5y ago
        Honestly, it seems it may be more than enough to become the preferred transactional currency of, say, Taco Bell. The decreasing inflation and other technical merits are super interesting, though.
  - steve_adams_86 5y ago
    I was thinking specifically in the beginning, though. Had no one used BTC at all for anything, I imagine it would have failed to thrive. Does that sound wrong as well?
    - arcticbull 5y ago
      Right or wrong is so hard to say, I'm just speculating. You could easily be right.

steve_adams_86 5y ago

Well, it required people like you actually using it to have any value in the start didn’t it? There had to be “losers” for there to ever be winners. But you’re not a loser because you still came out ahead. I’m not an economist or even an intelligent person, so this could be a terrible assessment of the situation.

arcticbull 5y ago
It accrues value specifically because people don't use it. Currencies don't skyrocket in value because it cripples the economy if that happens. In currency terms, it would yield a deflationary spiral. What happens is people save their currency instead of spending it, which causes retailers to lower the prices to incentivize spending. This in turn means they have less money to pay their workers, and they have to cut their pay and lay them off. This means the workers have less money to spend and the cycle continues. Even without a deflationary spiral, there's something called the paradox of thrift. [1] Something like 80% of Bitcoin hasn't moved in the last year. If we set aside the influence of USDT, the narrative you're pointing to would be that people are valuing Bitcoin more highly because of its utility as some form of currency - maybe, one day. In reality, due to its fundamental limitations and incentive structures (2-3 tx/sec), it cannot be a currency. It will always be the currency of the future, forever. [1] https://www.investopedia.com/terms/p/paradox-of-thrift.asp https://www.investopedia.com/terms/p/paradox-of-thrift.asp
- tata71 5y ago
  Now explain DOGE.
  - arcticbull 5y ago
    Memes.
    - tata71 5y ago
      Honestly, it seems it may be more than enough to become the preferred transactional currency of, say, Taco Bell. The decreasing inflation and other technical merits are super interesting, though.
- steve_adams_86 5y ago
  I was thinking specifically in the beginning, though. Had no one used BTC at all for anything, I imagine it would have failed to thrive. Does that sound wrong as well?
  - arcticbull 5y ago
    Right or wrong is so hard to say, I'm just speculating. You could easily be right.