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1 sat \ 8 replies \ @0xBTC OP 13 Jul 2023 \ parent \ on: Opinion: Why BTC can't become the reserve currency bitcoin
How would it not be the case. Would no one take on debt ever is that system? I don't think that is possible.
For example by demonetizing real estate. I believe on a bitcoin standard, real estate will be much cheaper.
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Yes. Real estate is a bubble, because people use it to escape inflation.
On a Bitcoin standard they will buy BTC instead of building real estate portfolios. More people will be able to afford a house when they're cheaper.
Real estate goes up when interest rates are low, which on a fiat standard means more borrowing, and crashes when those go up (less borrowing).
Also, as BTC value goes up, house prices will go down in nominal (BTC) terms.
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You inflate your money supply by taking out debt, I'll stay debt free and absorb your inflation in my deflationary asset called Bitcoin. Let's see who ends up better off đź‘Ť
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Most people that have switched over to bitcoin live simpler lives.
When you know your money will 10x in a few years, driving a piece of shit car so you can become financially independent makes a lot of sense.
Overspending is fiat.
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I don’t think debt will be as prevalent as it is in the fiat system, mainly because the supply of bitcoin is limited, so there won’t be enough to pay back the interest on all debt if the percentage of the economy that is debt financed is too high.
As for housing prices, the reason they are so high and require so much debt to purchase is two fold imo:
- people are using housing as a store of value, in the absence of good alternatives
- the debt based, fractional reserve system requires inflation to survive. Meaning the natural deflationary force of technology is not allowed to function as it should.
It’s hard to know for sure, but I imagine a world where Bitcoin allows for a house to no longer be multiples of average income, and be affordable for the average pleb
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Wow. This statement is quiet amazing. Do you think that throughout all of human history debt has been required? In my parents lifetime in the US debt went from being only for a home and this was modest debt to being a fact of life for buying depreciating assets like a car. The fiat system is not that old. You bring up a good thought experiment though in your OG post.
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Lots of things may evolve. First of all, I doubt more and more bitcoin will be lost in the future. Custody options will improve, and more care will be taken to secure bitcoin as it becomes more precious. Also, a whole new debt based system may arise, similar to the gold receipt IOUs of the past.
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And some of the IOUs were copied and can be again, but I suppose programmable money and sidechains can help fix that.
To play devil's advocate about precious items, those tend to have substitutes, so it will be interesting the psychological effect it has on those who lose it.
And there's almost like a reverse Cantillion effect while the rest of market assumes there's X supply while you (and whoever you tell) know it's X - whatever you lost, meaning that you can get deals on things.
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