Ask HN: Are heavily deflationary Cryptocurrencies sustainable? Bitcoin is without a doubt one of the scarcest assets in the universe, as its supply is completely insensitive to its demand. Is this extremely deflationary model, where the early adopters have a disproportionally large advantage over people that begin to use the system later on sustainable though? I guess my question is more philosophical, but will latecomers/later generations put up with a monetary system that is of such nature? |
Prices are not denominated in Bitcoins. Nobody is taking 10-year loans in bitcoin. There are not jobs where the wage is denominated in bitcoin in the contract. Prices are set in normal currencies and then converted to bitcoin when the payment is made. (prices denominated in currency is different from using currency for payments).
Bitcoin based monetary system would be crazy. It's not going to happen.
My question was purely hypothetical, in the case Bitcoin ever becomes a more attractive store-of-value or reserve asset than gold (maybe because its easier to transfer, store and verify ownership than gold) which I admit is a very big if.
Bitcoin valuation can't increase infinitely. At some point, people want to sell them more than there is demand and the price either stabilizes or collapses.
There will always be people that lose their private keys and the population of earth/universe will (probably) also increase over time.
Therefore, even when all the hype dies down, it is still designed to get scarcer and scarcer over time, regardless of the demand.