If the amount of ccy is steady while the amount of goods increases, then the ccy's value will increase relative to the amount of goods (and services). Bitcoin's absolute limit on how many are issued assures deflation in the context of an expanding economy. Vice versa if the economy contracts, of course. It's all relative. Think about it: actually, the amount of ccy only has to increase by less than the goods & services it pays for for it to be deflationary. So you can have a ccy whose absolute supply increases, but who's growth rate lags that of the economy as a whole. Gold fit that bill when it was the standard, in the late 1800's and up to 1914.
The Gold standard was abolished for one reason and one reason only: Gold cannot be created out of thin air, something that the banksters and the Elite do not want. Abolish paper money and let people buy stuff (and be paid) with gold (and other precious metals like silver) and inflation will disappear almost overnight.
Bitcoin is a pyramid scheme, just like Herbalife. But its alot more transparent, since the workings of the scheme are now in the hands of a community. So Bitcoin should have a value of $0, but if the community promotes Bitcoin well it can end up at $10k. The whole pyramid has to convince greater fools to commit a wealth transfer to early adopters. That can only be done with deceptive marketing.
trefoil, Yes, you are right. I had understood this part that you have written above. The author had implied that bitcoin was an inflationary currency, and rightly so. The number of bitcoins increase every year by whatever percentage and then become constant at a certain level. In real life bitcoing isn't as inflationary because other currencies are printed a lot more. Here we are not worried about increase or decrease in goods. There was a reason I had left that point out previously. The good could stay the same in the economy but still have increased or decreased value based on their demand. Therefore, for the purpose of the discussion the goods and the demand and supply of them were left constant. The only variable is the CCY. Strangely enough, from your exposition I believe you already understand what I have written so far. The only reason to address the possible flaw in the article was to point out that an algorithm that makes the CCY deflationary has to reduce the amount of that CCY. Which doesn't make sense as someone will have to give up their CCY for there to be less of it. It is this problem of giving up that to me makes this situation unlikely. At least I wouldn't buy a CCY that could disappear from my account. Others might also avoid adapting it in the first place. Making this the sole argument to prove that bitcoint will disappear seems faulty to me. Now bitcoint might still disappear from other reasons, such and government intervention or something else, but isn't likely to do so because of a deflationary algorithm in CCY. Xelite777 I believe is correct in stating that bitcoin might be the beginning. The market eventually will decide whether CCY in this shape or form is acceptable or a refined version is a better option. I am of the opinion that the genie is out of the bottle and isn't going to go back. It is us who have to monitor and adapt as the situation unfolds. Gringo
People have been predicting its failure since 2009. Btcoin serves a purpose. It facilitates commerce and is a longer term hedge against hyperinflation. Also there are no god alternatives to bitcoin, unlike stocks where there are 1000's to chose from. I own about 40 coins and won;t b selling anytime soon
Bitcoin is easier to promote than Herbalife, and much easier to comprehend as a pyramid scheme. Plus its transparent, the algortihm is open-source. If Herbalife is a grade C pyramid scheme, Bitcoin is a grade A pyramid scheme. With Herbalife you have to activly go out promote, get a downline, make calls, promote more etc. The upside is you get a stream of earnings, the problem is when your downline stops making money you stop making it too. Theres alot of uncertainty with herbalife. Now bitcoin, buy bitcoin for lump sum of $1000 Promote on ET, promote on reddit, promote everywhere, bitcoin goes to $10k, cash out at 100.000 make 99.000. Simple to understand. The only hard part is how to buy and sell them you have to create accounts on mt.Gox and stuff. Theres a reason there are 60 copycats of bitcoin.