Author Topic: Game: Convince the skeptic - Bitcoin  (Read 415 times)

WneverLOSE

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Game: Convince the skeptic - Bitcoin
« on: Today at 08:12:36 AM »
Idea: I am going to play devil advocate, I am asking cryptocurrency bulls (and especially bitcoin) to imagine they are speaking to a smart but skeptical journalist writing a story about bitcoin and try to explain to him your part of the story.

Rules: Each time only one person can reply to my response, their reply can be about the subject my last message was about (if I wasn't convinced) or about a new merit of Bitcoin you would like to bring up.
I am only one person with limited ability to respond, if you feel that something you have to say is so important and you don't get a change to say it in time please write it in short and I will reply to that message as well :)

My objectives are as follow:
1) Challenge my beliefs and knowledge about bitcoin.
2) Practice not being a true believer as Charlie would say.
3) Provide an interesting dialog that can be read by everyone and will be short, interesting, insightful and with little repetitive arguments.

I would start with a criticism I have with one aspect of bitcoin.
Many people argue against fiat currency on the bases of store of value. The argument goes that since all fiat currencies have no element of scarcity it will always be inflationary. Bitcoin on the other hand is a much better store of value than dollars since it is not controlled by a central bank and limited by supply.
I don't deny the fact all fiat currencies are subject to inflation, that's true. The value of the dollar has lost more than 90% of its purchasing power in the last 100 years. But at the same time all wages have gone up with inflation in the long term. I am arguing inflation is a force of good rather than evil and that how I see it:
Think of inflation as a hidden tax on wealth and as an equilibrating power. Those who hold large amount of wealth get poorer each day and those who live paycheck to paycheck aren't affected by inflation (assuming wages keep up with inflation).
Moreover, inflation is a strong behavior instructor, since everyone knows that if they sit on their money it will get worth less and less each day this incentives investment (in companies, technology and infrastructure) thus benefiting society, just imagine what would happen if there was no consequence for sitting on your wealth.
It would be great if someone can challenge my view on wealth inequality inherent in the bitcoin design and the effects it will have on society.


no_free_lunch

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Re: Game: Convince the skeptic - Bitcoin
« Reply #1 on: Today at 10:13:33 AM »
I don't like how you went from bitcoin to an economic argument on the merits of inflation.  I see the link but there is no need to talk bitcoin if you are only interested in inflation.

rkbabang

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Re: Game: Convince the skeptic - Bitcoin
« Reply #2 on: Today at 10:43:19 AM »
I don't like how you went from bitcoin to an economic argument on the merits of inflation.  I see the link but there is no need to talk bitcoin if you are only interested in inflation.

Yes.  And I'd argue that inflation hurts the elderly who are trying to live off of their fixed savings far far far more than it hurts the super rich who have investments which more than keep up with inflation.  When you are at the grocery store and see the elderly cashier ringing up the other elderly woman's cart full of cat food you have seen the effects of inflation.


WneverLOSE

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Re: Game: Convince the skeptic - Bitcoin
« Reply #3 on: Today at 11:43:13 AM »
I don't like how you went from bitcoin to an economic argument on the merits of inflation.  I see the link but there is no need to talk bitcoin if you are only interested in inflation.

Yes.  And I'd argue that inflation hurts the elderly who are trying to live off of their fixed savings far far far more than it hurts the super rich who have investments which more than keep up with inflation.  When you are at the grocery store and see the elderly cashier ringing up the other elderly woman's cart full of cat food you have seen the effects of inflation.

no_free_lunch
Well maybe I didn't explain myself correctly, I am going to pass from one subject to another, I don't understand why would you think I was only going to talk about inflation, My intention was just to start the conversation. What does it mean when you say you don't like that I am talking about inflation ? isn't it (or should I say the lack of it) part of bitcoin ? so why shouldn't I speak about it ?

rkbabang
I don't really think your criticism about inflation is really about inflation. Isn't it about not having proper financial planning ? If I am a retire that saved enough money why is inflation hurting me more than the 1 percent ? both of us have our wealth invested just that my money is more in a fixed income than his. still i'm getting my income stream and the market is pricing the security for proper real return.
Why do you think inflation hurts the elderly "far far far more" ?
« Last Edit: Today at 11:45:24 AM by WneverLOSE »

no_free_lunch

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Re: Game: Convince the skeptic - Bitcoin
« Reply #4 on: Today at 11:55:32 AM »
Maybe I was too harsh but it just feels like click bait.  "Let's talk about bitcoin's merits" and before we even get into that lets talk inflation.  Why don't we just talk inflation then?  Bitcoin itself is too broad to discuss but then we start getting into whether inflation is a pro/con .... I mean this will be endless.

rkbabang

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Re: Game: Convince the skeptic - Bitcoin
« Reply #5 on: Today at 12:09:00 PM »
I don't like how you went from bitcoin to an economic argument on the merits of inflation.  I see the link but there is no need to talk bitcoin if you are only interested in inflation.

Yes.  And I'd argue that inflation hurts the elderly who are trying to live off of their fixed savings far far far more than it hurts the super rich who have investments which more than keep up with inflation.  When you are at the grocery store and see the elderly cashier ringing up the other elderly woman's cart full of cat food you have seen the effects of inflation.

no_free_lunch
Well maybe I didn't explain myself correctly, I am going to pass from one subject to another, I don't understand why would you think I was only going to talk about inflation, My intention was just to start the conversation. What does it mean when you say you don't like that I am talking about inflation ? isn't it (or should I say the lack of it) part of bitcoin ? so why shouldn't I speak about it ?

rkbabang
I don't really think your criticism about inflation is really about inflation. Isn't it about not having proper financial planning ? If I am a retire that saved enough money why is inflation hurting me more than the 1 percent ? both of us have our wealth invested just that my money is more in a fixed income than his. still i'm getting my income stream and the market is pricing the security for proper real return.
Why do you think inflation hurts the elderly "far far far more" ?

There are many reasons.  One is that the elderly (today's elderly) have been lied to their whole lives and thought that they would be taken care of by Social Security. Then they retire to find out that they barely get coffee money and healthcare is huge issue.   Thus they have not saved enough and whatever they did save is being eaten by inflation every year so they now have to work.

Also your risk tolerance is less when you need the money presently.  At 30 or 40 years old you can invest in higher risk/higher return investments, but when you are retired (and you are not very wealthy) you need to both live off of your investments and try to not lose any ground.  This is hard to do for the average person with no interest in investing in an inflationary environment.  What ends up happening is that being risk averse leads to inflation loses.  In a non-inflationary environment (or deflationary environment) you could save money if that was your intention and not have it eaten away by the year.  If you did want to invest your money, then any return at all would be positive, you would only lose money if your investment actually lost money.  It would make it much easier to plan for retirement, live conservatively, and know that you will always have enough.  Forcing everyone into the stock market whether they wish to be investors or not just to avoid losing your wealth is not an ideal situation.  Not to mention inflation in the housing market creates houses to be re-evaluated for tax purposes and the elderly end up paying much more to simply live in their paid off homes then they had ever imagined.  There are all kinds of ways that inflation hurts the elderly.



LC

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Re: Game: Convince the skeptic - Bitcoin
« Reply #6 on: Today at 12:23:37 PM »
How do you feel about the non-inflationary characteristics of bitcoin in an environment with very low inflation? The US hasn't seen much inflation in the past 5 years. What if that persists?
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rkbabang

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Re: Game: Convince the skeptic - Bitcoin
« Reply #7 on: Today at 12:39:50 PM »
How do you feel about the non-inflationary characteristics of bitcoin in an environment with very low inflation? The US hasn't seen much inflation in the past 5 years. What if that persists?

With all of the QE, do you think it is possible for it to persist?   That isn't a rhetorical question, because I don't know.  My gut tells me that at some point the chickens are going to come home to roost and we are going to be hit with an uncomfortable rate of price inflation.  Most of my wealth is still in stocks and USD, not bitcoin, but I'm glad I have some bitcoin nonetheless.