Will the energy cost and deflationary nature of Bitcoins doom the currency to obscurity?

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There is nothing technically difficult about making this change. Edit a few lines of code, upload a new version, make sure everyone installs it.

However, it is extremely unlikely that any respected developer will ever try to make such a change, or that enough users will adopt it if it is offered.

The reason is that people who hold bitcoins and don't get rid of them like hot potatoes, do so with the understanding that every BTC they have entitles them to 1/21M of the total eventual worth of Bitcoin and that there will be no unplanned inflation. They have confidence that the generation schedule will not change, because it has never changed so far. And people who would consider condoning a change, know that by so doing they will create a loss of confidence for future generations who will have this precedent. And, everyone knows that everyone knows that changing the schedule will create a loss of confidence, giving even more confidence that there will be no change as...

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Deflation has been a point of debate among the various schools of economic thought for a very long time. One one hand, the Keynesians and Neo-Keynesians argue that deflation is a very negative economic phenomenon and constantly warn of a “deflationary death spiral,” in which people will stop spending indefinitely—in constant anticipation of lower prices—and businesses will fail. Obviously, if all the business failed there would of course be huge waves of unemployment and economic depression. On the other hand, the Austrian school, and some students of the Chicago school, argue that a “deflationary death spiral” can not happen in the real world. Austrian economists especially argue that such a concept only holds weight in a static or evenly rotating economy—a theoretical construct where the economy is in perfect equilibrium, there is no economic growth or decay, and profits equal costs—and is completely irrelevant in the real world.

Ludwig von Mises (left) and John Maynard...

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Find answers to recurring questions and myths about Bitcoin.

Table of contents

General

What is Bitcoin?

Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence.

Bitcoin is the first implementation of a concept called "cryptocurrency", which was first described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions, rather than a central authority. The first Bitcoin specification and proof of concept was published in 2009 in a cryptography mailing list by Satoshi Nakamoto. Satoshi left the project in late 2010...

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Fiat money and cryptocurrencies created for the exchange of goods and services. Each currency has its advantages and disadvantages. However, rubles, dollars, euros or any other national currency could support the development of the economy, unlike Bitcoin, in the event that it totally replaces fiat money.

The basic idea of money is the exchange of goods and consequently exchange between people. Bitcoin deals with this somewhat better than traditional money, but there are flaws in cryptocurrencies.

Pros of Bitcoin

Anonymity. Compared with the national currencies for transfers nobody watches cryptocurrencies. Therefore no one can apply any sanctions to the sender/ recipient. Likewise, no one can prohibit the transfer of money to any one individual. There is complete freedom of transactions. Small commission. The minimum commission guaranteeing transaction processing and transfer from one bitcoin wallet to another is 0.0001BTC, which at the current...
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There have been multiple mentions of bitcoin ending up in a deflationary spiral on the long run. At a bird’s eye view for a layman, it sounds true. However, if one takes some time to study bitcoin and understand it in details, it will become obvious that the digital currency is quite different from conventional fiat currencies, and the deflationary spiral that seems perfectly applicable to fiat currency at certain circumstances doesn’t apply to its digital counterpart.

For those who do not know about deflationary spiral, it is an economic concept which states that continued deflationary trend will lead to reduced prices, increased production and increased value of the currency with respect to the purchasing power. The increasing value of currency, combined with reduced prices will lead to a fall in the circulation of currency and ultimately its demise.

Theoretically, those who argue that bitcoin will go down the deflationary spiral, believe that with the number of...

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Bitcoin is just like all other digital currencies; nothing new

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Bitcoins don't solve any problems that fiat currency and/or gold doesn't solve

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Bitcoin is backed by processing power

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Bitcoins are worthless because they aren't backed by anything

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The value of bitcoins are based on how much electricity and computing power it takes to mine them

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Bitcoins have no intrinsic value (unlike some other things)

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Bitcoins are illegal because they're not legal tender

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Bitcoin is a form of domestic terrorism because it only harms the economic stability of the USA and its currency

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Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization

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Bitcoins can be printed/minted by anyone and are therefore worthless

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Bitcoins are worthless because they're based on unproven cryptography

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Early adopters are unfairly rewarded

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21...
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Bitcoin is the currency of the Internet: a distributed, worldwide, decentralized digital money. Unlike traditional currencies such as dollars, bitcoins are issued and managed without any central authority whatsoever: there is no government, company, or bank in charge of Bitcoin. As such, it is more resistant to wild inflation and corrupt banks. With Bitcoin, you can be your own bank.

If you are new to Bitcoin, check out We Use Coins and Bitcoin.org. You can also explore the Bitcoin Wiki:

How to buy bitcoins
Buying Reddit Gold with bitcoin

Will I earn money by mining bitcoin?

Security guide for bitcoin

Community guidelines

Do not use URL shortening services: always submit the real link. Begging/asking for bitcoins is absolutely not allowed, no matter how badly you need the bitcoins. Only requests for donations to large, recognized charities are allowed, and only if there is good reason to believe that the person accepting bitcoins on...
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Going into Friday, Japanese monetary policy already stood out as the most egregious example of Keynesian insanity the market has ever witnessed.

You’ll recall the central bank is monetizing the entirety of gross JGB issuance and is on a lunatic quest to own the entire ETF market.

But the BoJ still hadn’t gone full-Krugman by taking rates negative. That changed overnight when the bank took the NIRP plunge as Haruhiko Kuroda reminded the world that when it comes to maniacal monetary policy, no one does it like he does.

Why is NIRP necessary in Japan? The same reason it’s necessary in Europe and the same reason ZIRP had to hang around in the US for eight years: inflation. Or, more specifically, a lack of inflation.

Japan has been stuck in the deflationary doldrums for as long as some Wall Street rookies have been alive and Europe has bounced around in deflation on several occasions of late although data out today showed eurozone inflation “soaring”...

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Pro

I respectfully disagree with my opponent but let me first thank him for stepping up to the challenge, having a polite tone, and raising some good points, despite the fact that said points do not sufficiently invalidate my stance which is that Bitcoin is a fundamentally sound money.

My opponent has created a straw man argument by using a false definition of sound money. He has invited me to correct him and so I will. "Sound money" has been traditionally defined as being a store of value, a unit of account and a medium of exchange. There are also lesser qualities which are preferred, but not necessary, in sound money. Such fringe qualities include divisibility, lowered transaction costs, intrinsic value, and others.

My opponent has not argued that Bitcoin is incapable of any of these. He has tried to malign Bitcoin due to its deflationary nature but has unknowingly strengthened the case in doing so.

I also argued that Bitcoin is better than the...

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I hope to set a Bitcoin Magazine record for most succinct argument here, as my profession has an uncomfortable obsession with efficiency. I study economics because I like teaching at the University level, and because I want to improve the field. Here’s how the community can help.Coin enthusiasts often struggle at convincing economists and academics that Bitcoin is interesting, and that’s largely because the community is misusing many economic ideas.At the forefront of this is the misuse of the notion of a deflationary currency. Deflation is a decrease in the prices of goods, and yes as prices fall each unit of money is worth more in terms of how much it buys. This is not something that is unique to Bitcoin, it’s a property of any type of money.When we refer to changes in the price of one currency (or an aspiring one like Bitcoin) in terms of another ($), we should be referring to either depreciation or appreciation: Bitcoin has been strongly appreciating(gaining relative value)...

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Although it has been overshadowed in recent months by mostly regulatory news, the issue of deflation and bitcoins is still a topic worthy of debate. It was one of the biggest criticisms that faced bitcoin earlier this year as the price rose to an all-time high. Most of the bearish views on bitcoin deflation came from economists, who may or may not have understood the true nature of bitcoin.

What is deflation?

The general idea is that deflation is a decrease in the price of goods and services. In this case, we are specifically talking about bitcoins. As bitcoin's value goes up, the cost of paying for things in BTC goes down as a result of an item’s fiat monetary value staying the same. This might trigger deflation, and some economists believe that once it starts happening, deflation will spiral out of control.

Deflation’s overall drop in prices reduces economic activity. It can cause investors to hold onto a currency, which can make the problem even worse....

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To say these are unprecedented times is an understatement. Global Central Banks are using every single monetary policy tool at their disposal to try and fight the forces of deflation and this has resulted in currency wars. In fact, 15 central banks have eased monetary policy in one way or another this year. Since this is a global economy each move made has far reaching affects upon all nations and their abilities to control the imbalances being caused by central bank brute force.

The term currency war gained prominence in 2010 when Guido Mantega, Brazil’s Finance Minister, complained that quantitative easing (QE) was weakening the US Dollar and prompting other countries to respond so they wouldn’t lose their export competiveness. This led to a “race to the bottom” in which all countries were engaged in trying to weaken their own currencies as much and as quickly as possible. Fast forward to today, as the chart below shows, and the opposite situation holds true. The USD has...

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Hey Guys,

Two very important type of questions you will get is based on conclusions and inferences, Now in an instant moment they will sound very familiar to you. But both these concepts are poles apart.

Now you may wonder as to why do we need to know literal differences in meaning for CLAT. Sorry to inform you guys, but CR in CLAT is tougher and more twisted than you think and this article might be the reason for your various wrong answers in practice papers.

Now the type of questions you will get will be either that you will be given a statement or passage and they will ask you “What is the inference?” or “what is the Conclusion?” that you arrive at.

Advice 1: ALWAYS READ THE PASSAGE FIRST. I am saying this again and again. Reading the options before will not only confuse you but if you consider yourself really smart will introduce bias in your thinking and you will mark the wrong answer.

Advice 2: Read ALL the options carefully. Do not read...

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