You are viewing a single comment's thread from:

RE: The false "scalability" problem

Thanks @milaan.

About inflationary vs deflationary - there is a dichotomy between a "good Store of Value (SoV)" and a "good Medium of Exchange (MoE)". Money must have both characteristics (besides being also unit of account, but that one is an easy one). Intuitively, there is value in scarcity - the scarcer a thing, the better SoV it is. A deflationary currency such as Bitcoin is an excellent SoV;

What many people don't realise is that the better a currency is at being SoV, the worst it becomes at being MoE!

This has been expressed most famously as "Gresham's law": "Bad money drives out good money". A good SoV is "good money" - in the sense that it keeps its value ... but precisely because of that, it is being driven out of circulation (MoE) by "bad money" - money that is inflationary and thus an inferior SoV.

So there is a right balance to be striken. As I've argued in a previous article, "Bitcoin is too good to be money" ("money" being understood here as MoE). By contrast, inflationary currencies such as Hive are not as good as SoV, but are better MoE. This is a "match made in heaven between Bitcoin and the "cryptoverse"