Day in and out, I keep my ears open for developments on crypto currencies. One thing irritates me just about as much as when I hear that inflation is somehow good for the economy and, hence, the end consumer.
You will hear this and that expert battle the point that BTC is gaining ground as a currency and that more and more stuff is bought with it. For example, in the Keiser report of 29-07-2017 they report George Gilder trying to convince Peter Schiff of exactly that, but the whole thing is an exercise in futility, really, because it misses the bigger point:
The whole idea of using a deflationary (ie: gaining in value, because in part, of limited supply) currency like crypto instead of an inflationary one (losing in value, because in part, of increasing supply) to buy anything is an asinine concept.
Fiat currency encourages instant consumption and credit use because of its perpetually declining nature. On the other hand, crypto currency encourages saving and deferred gratification for the opposite reason.
Do not mistake what I say; I do wish that crypto gets widely used at some point as some form of currency, but using it at this time instead of fiat is shooting oneself in the foot. Clif High stated at some point that he paid over 1000 BTC for a pair of socks. Let’s not forget the 10 000 BTC pizza, either. In retrospect, wouldn’t it have been much wiser to pay 20 USD$ ?
People realise this and stash up on crypto while using fiat, in a perfect example of Gresham’s law, which states that bad money drives away good money.
To make an historical parallel, BTC is the current equivalent of the Athenian gold coins before the Spartan wars forced them to dilute the gold content with copper until it contained but traces amount (don’t quote me on the exact metals, you get the idea). Fiat is that exact coin after all that dilution. Case in point :
Source: http://www.freegrab.net/Decline%20in%20USA%20Dollar%20vs%20Gold.htm
Do you begin to understand how foolish it is to try to make the point that goods and commoditites are being purchased with crypto money ? The only reason I can see to do such a thing is to escape taxation, have privacy, buy in a foreign country without having to change currencies or a combination of all. Of course, this all goes just too well with those making the point that crypto is an excellent form of money for criminality and such.
There will come a time that crypto is a widely used currency, but before it happens, either fiat will have to stabilise drastically or be phased out altogether. Until then, wise people will HODL, stack and wait.
Amazing how worthless fiat is. I remember when I was a kid $100 was something, now I'm pulling them out of my wallet every week. https://steemit.com/bitcoin/@hotsauceislethal/bitcoin-price-forecast-7-31-2017
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