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nostr:npub1s05p3ha7en49dv8429tkk07nnfa9pcwczkf5x5qrdraqshxdje9sq6eyhe I know you don't know me, but I would really like to hear your thoughts on this.

Jeff Booth 2y ago

The market will figure it out as debt is liquidated over time because in a deflationary system, the debt gets more expensive.

The reason people invest in ideas is that they “believe” they can have a higher rate of return than a “risk free” rate.

A belief that the only reason people invest is because otherwise their money loses value is a fallacy. In fact, that probably has more to do with a mis allocation of resources that hurt productivity.

There is no change to human nature by having a system obey the rules of a free market. Great ideas will be funded b/c there is an economic incentive to do so.

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Discussion

Tetsu Tamasi 2y ago

Of course! Even when i was black pilled and didn’t understand Bitcoin, didn’t think about inflation… I still understood investing as “you lock your money into something for certain period of time to get a certain (good) return.”

All plebs understand that. But it was HARD to find something worth investing into before #Bitcoin.

Deleted Account 2y ago

Another point to think about, when bitcoin is understood by the masses, it’s likely because they’ve watched their fiat be destroyed by inflation or they’ve witnessed the total collapse of banking due to extreme deflation.

In that world, who wants to own fiat long enough to deposit it in a bank so that the bank can loan it out to a borrower?

In time, I think people live in a bitcoin only world. As it’s not possible for credit to exist on bitcoin, people won’t be able to borrow. Therefore, investments will be made by people that are prepared to lose their own bitcoin. This should hopefully mean less malinvestment overall and the ideas actually benefiting from investment will be making the world a better place

Crizzo 2y ago

Of course the market is going to do what it's going to do. I'm trying to predict the future here please humor me. Some Bitcoiners see a future where Bitcoin is the only currency. Nocoiners do not see a future with Bitcoin in it at all. The reality is probably somewhere in between.

What I'm trying to do is envision what that reality may look like. Could the interaction between Bitcoin and fiat create a more equitable credit system by providing a bridge between the static rigidity of Bitcoin and the infinite malleability of fiat? I think that interaction could tell us a lot about the true price of risk and it will be how interest rates are determined, at least partially. Interest rates are an expression of risk after all.

If I can describe this potential interaction and figure out how it could work, I think it could further my understanding of the current state of things.

Anyway I just barely thought of this today and I'm still working out some details. I will post something more fleshed out soon.