Thread

1. seymon · 1789644245 · focus · HN ↗

   I hope they still have the private key.

   1. osigurdson · 1789648222 · focus · HN ↗

      It is an interesting fact about Bitcoin in general. There are 21M tokens in total AND some percentage are lost every year. Run this simulation long enough and there will be very few active Bitcoins remaining.

      1. Roark66 · 1789649066 · focus · HN ↗

         Seems pretty silly to build in deflation into a currency. It incentivises putting your money in a mattress for 100 years.

         1. benenrjdnz · 1789649507 · focus · HN ↗

            Deflation is a good thing, it rewards delayed gratification. Those evil Keynesians have convinced the world a little bit of inflation is good. It isn’t. Losing purchasing power on your money is a bug.

            Nothing wrong with putting money under a mattress for 100y if the value of money is not evaporating.

            For most of human history the money was stable. It’s the disasters of 20th century wars that eroded the value, and 21st century lack of monetary discipline that keeps driving it down now.

            1. ngruhn · 1789650151 · focus · HN ↗

               It's nice when I do it. Not so nice when everyone else does it. If sitting on the money has better returns than running a supermarket, why run a supermarket? Any investment has to beat deflation. Why hire people? In fact maybe I should fire everyone to hold on to more capital and spend as little as possible...

               1. darkwater · 1789652255 · focus · HN ↗

                  > If sitting on the money has better returns than running a supermarket, why run a supermarket?

                  First of all, because not everyone starts with inherited wealth. Also because ideally running a supermarket should give you more money even in a deflationary world. Worst thing is that you gain less money on day N+100 vs day N, but it does not mean you lose money or stop gaining it.

                  1. skulk · 1789652947 · focus · HN ↗

                     > First of all, because not everyone starts with inherited wealth.

                     So then you need an investment; you're going to have to return a multiple of the deflation rate since the risk of your supermarket shutting down is probably higher than the currency changing course.

                  2. echoangle · 1789654999 · focus · HN ↗

                     > First of all, because not everyone starts with inherited wealth.

                     So how are you going to build the supermarket?

                     > Also because ideally running a supermarket should give you more money even in a deflationary world.

                     If it needs to give you more money than just saving the investment (which it should, you need to be rewarded for the risk or you would just save the money), obviously the profit margin has to be higher than it currently is, which would increase prices.

                  3. MisterMunchkin · 1789656067 · focus · HN ↗

                     But a deflationary system rewards inherited wealth. It's a pyramid scheme where the person at the top splits their big piles up into smaller piles, selling them to newer people, who then sell their smaller piles to newer people...

                     So you'd be working for 0.000000000000000001 coins per day at the amazon warehouse, while Bezos has 500000 coins because he was born with them. There would never be a way for you to get 500000 coins, because there are only 20m coins in existence.

                     1. osigurdson · 1789737114 · focus · HN ↗

                        The easiest thing for people to do in that situation is just create another Bitcoin. The person that has the 500K original Bitcoin is free to trade with themselves. This is why Bitcoin is much more of a social network than an algorithm.
                  4. shkkmo · 1789656070 · focus · HN ↗

                     > Also because ideally running a supermarket should give you more money even in a deflationary world.

                     Running a super market involves owning physical goods for some period of time. With deflation, the price you can sell those goods for drops while you are holding them. In fact most economic activity involves paying for inputs (labor, materials, etc) and then later getting paid for your outputs. Deflation directly impacts profitability and can cause losses.

                     Since deflation causes demand to drop as economic actors wisely choose to start hoarding currency and buying less, this causes a feedback loop where deflation can spiral.

                     Similarly, inflation causes demand to increase since holding currency is unwise and it is better to spend or invest that currency than hold onto it.

                     These two patterns mean that the neutral state (no inflation or deflation) is unstable as any deviation above or below starts a feedback loop until things fall apart. This is the boom and bust economic cycle that modern monetary management is supposed to ameliorate.

                     Given that you want economic growth, the best solution is to try to stabilize around a small fixed amount of inflation. Arguing for the end of inflation is arguing for the end of economic growth.

                     1. dcow · 1789659744 · focus · HN ↗

                        My family needs food though. Perhaps a supermarket is a poor example. I think people might purchase fewer luxury goods in a deflationary world which TBH I'm not sure is a bad thing.

                        To put it another way, the model you're presenting reads well in an economics textbook and I'm sure is exactly how we justify our MMT social policy but it doesn't fully account for actual human behavior. I'll buy necessities (house/food/water/electric/communication) even in a deflationary economy.

                        When was the last time you went to the grocery store and thought "I better buy this milk today because my money will have less spending power tomorrow"?

                        1. qlte · 1789746498 · focus · HN ↗

                           An economy driven only by spending on bare essentials would be worse than Great Depression level malaise and stagnation. Where are you imagining growth would come from?

                           1. dcow · 1789758559 · focus · HN ↗

                              Time is money. Emotion. You think someone's not going to buy a sports car because it will be cheaper in 10 years? That's 10 years without a sports car.

                              They might, however, ask whether they need a car with 30% profit margins or one with closer to 10%.

                              I don't think the grand social goal is to maximize economic growth. It's a stable healthy society.

                              Right now it really just feels like people spend on whatever the hell they want to without any thought whatsoever. Consume. Yes good, consuuuume. I'd trade slower economic growth for more responsible spending...

                              1. brigandish · 1790644875 · focus · HN ↗

                                 > I don't think the grand social goal is to maximize economic growth. It's a stable healthy society.

                                 The contentious part of that statement is what constitutes "healthy" and "stable". Look at Japan, stuck in a long deflationary period that looks like it will end very badly and is already going badly. They are very stable though.

                                 That, for me, makes growth look much more tempting as a choice for what constitutes healthy.

                  5. thesuitonym · 1789657244 · focus · HN ↗

                     But if sitting on a pile of cash provides returns, eventually all money will accumulate into the hands of a few ultra wealthy individuals. (Hmm...)

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