There was a recent BTC sell-off. A few large holders in need of liquidity sold to many small buyers. What effectively happened, what effectively has been happening, is that BTC is getting transferred from people with high-time preference to people with low-time preference. 2/5
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Price, of course, is a function of supply and demand. Supply is made of two parts: stock and flow. Stock meaning the existing stockpiles, flow meaning the production. Flow, or the production, is limited as it cannot be artificially inflated. 3/5
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Once flow is at 0 the stock will be distributed among people with low-time preference, meaning they won't be that interested in selling it. This expectation of scarcity drives a self-fulfilling prophecy where demand is expected to dwarf supply thus ensuring the price goes up. 4/5
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The rational expectation of price going up over the long-term makes it so that people with low time preference stock up on it even more thus further driving the self-fulfilling prophecy to completion! It's an extremely ingenious system. 5/5
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Did I fuck anything up?
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Replying to @nosilverv @bitstein and
So do you think it's a currency or a commodity? A digital commodity is perhaps interesting (tho there's already been alternatives) but not interesting in the way a digital currency would be. And it seems apparent that a non inflationary currency will never see actual spending.
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Replying to @CyrusOfHearts @bitstein and
> a non inflationary currency will never see actual spending. how come?
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Replying to @nosilverv @bitstein and
Because inflation devalues held currency, giving the incentive to spend. Without it people just hoard or speculate.
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Replying to @CyrusOfHearts @nosilverv and
Entire world economy built on this principle bro. Money has to keep moving for finances to be available for businesses to function.
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Replying to @CyrusOfHearts @nosilverv and
@eigenrobot am I fucken dumb? On this specifically I mean. This is basic shit but I'm nothing if not humble.1 reply 0 retweets 1 like
oh I have few Opinion's about money especially crypto plenty of reason to spend currency even if it's increasing in real value over time tho other assets may be increasing more quickly, risk aversion, etc also some element of rational expectations in pricing just hard to say
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