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Ofc 1 BTC = 1 BTC alone doesn’t make for sound money. The point economists miss is that #Bitcoin is like a ruler. Finite supply allows us to measure other things. Fiat supply keeps growing, so measuring in $’s is meaningless. Can’t measure things with a ruler that keeps changing.https://twitter.com/lawrencehwhite1/status/1099427956131287040 …
This doesn't account for variation in demand, which is what produces Bitcoin's volatility. It will very likely decline, eventually even below the volatility of fiat, but it will never be zero. There is no such thing as a ruler in economics, and can't be.
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FRBNY has gold vaults beneath it. All dollar-based derivative assets can be forensically traced to the gold as an anchor of value. But removing the gold would have no effect on the derivatives. If bitcoin evolves to sound money, it’ll eventually just be the gold in the basement.
Derivates can’t be built near-infinitely upon bitcoin and eventually detached from the underlying btc market value?
We keep gold in the basement because it's a pain to lug around or send over the internet. Bitcoin is easy to carry and send, so why bother with bitcoin IOUs?
Also, precious metals were expensive to validate without trusting a mint to reliably coin it, a trust that was often abused, as was the trust in IOUs & other derivatives. Validation of Bitcoin is very inexpensive, and universal when receiving money on the Bitcoin main chain.
I’m not comparing btc to gold beyond noting the USD is/was a derivative of gold. Derivatives aren’t created for efficiency, trust, ease of transfer, or any practical reasons at all. They’re created out of profit incentive. Any sound money/hard asset will generate derivatives.
Surely if somebody is making a profit off them, and it's a free market, somebody on the other side of the deal is getting value they are willing to pay for. What is this value>?
Always the right question... usually time-value/credit/debt. US didn’t break the gold peg because they were tired of schlepping gold around. It was a coercive credit line extension. At the free market level, at this moment I can buy btc futures at CME easier than elsewhere. My $
"There *is* such a thing as a ruler in economics, and the thing that measures is time" --You, basically. cc @ScandalOfMoneypic.twitter.com/jTRUm1a7bv
Basically not me. Time is only a proxy measure, using the objective to estimate the subjective. Works only in certain supervised contexts, where other aspects of the value are being locally estimated and separately incentivized. https://unenumerated.blogspot.com/2011/06/of-wages-and-money-cost-as-proxy.html … http://www.fon.hum.uva.nl/rob/Courses/InformationInSpeech/CDROM/Literature/LOTwinterschool2006/szabo.best.vwh.net/measuringvalue.html …
Nick, I agree. The USD is a the best measure of value we have today despite variations in demand simply because it has so much economic inertia behind it, it is very liquid. USD does not respond drastically to changes in demand. BTC could achieve this same status.
And 1 BTC = 1 BTC regardless of demand volatility. Will be the most volatile money we see and eventually the most stable known to man. Control of supply is the only thing that matters. As long as no authority or no amount of resources can produce more/less .... becoms hard $
The hardest money to make more of, you have to "waste energy" to make it, and even that won't work soon; the hardest money that has ever existed.
I want to own the hardest money to make more of. Easy money will flow into hard and get eaten up. How much energy is being “wasted” by not collecting more of the Niagra falls? How do we measure if what we are using today is excess or surplus? Devils advocate.
Before you correct... Excess. Surplus. Shortage. You know what mean :)
Markets behave like liquids. Price is displacement. Immerse an object into a body of liquid, and the liquid will rise. Remove it, the liquid will go down. The greater the volume of the liquid relative to the weight of the object, the less the liquid becomes displaced.
Definitely true. But there will always be one internet and it will thrive on as long as it exists. The entire globe isn’t even connected to it either so the only way its market goes is upwards. More people on the internet will incentivize bitcoin usage
Exactly. Variation in demand always has the final say. The problem is collateralization, which has historically proven to fail.
A price-flexible and non asset-backed system could adapt supply to meet demand... reducing volatility. Something like @BitBayofficial’s dynamic peg.
Agreed. We can start talking about the USD's bitcoin-denominated volatility though.
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