The place the rubber hits the road on this problem is that companies who would receive payment under this approach will not sign up to a system that causes their holdings of cash in the system to decay, if there are other alternatives.
Most companies that today accept bitcoin don’t hold bitcoin for a while but immediately transfer it into dollar. It’s not really a problem for a person who doesn’t plan holding currency for a while.
On the other hand the aspect that you don’t want to hold the currency for longer periods of time might reduce speculators in the market and produce a currency with less price fluctuation then bitcoin.
First, dividing users of bitcoins into people who spend it quickly and those who hold it obscures the more fundamental truth that all bitcoin users hold them for some period of time.
Second, all businesses have cash holdings. Larger ones have entire treasury departments devoted to doing nothing more than getting a few more basis points on that cash by active management in interest bearing accounts.
The combine to make me very skeptical that people will accept a currency that depreciates in value and is not already accepted. Imagine the interest rate that they would have to obtain just to offset the decay fee. If prospective users know that they can’t get such an interest rate, why would they ever sign up for a system that guarantees them a loss?
If prospective users know that they can’t get such an interest rate, why would they ever sign up for a system that guarantees them a loss?
It doesn’t guarantee a loss, the system is zero sum. People who hold money for longer time lose but other people win because that money is transferred to them.
Let’s say you have two self driving cars. If they drive together with 1 meter of distance between them the car in the back is in the slip stream of the first car and therefore needs less energy to drive. On the other hand to be able to drive in that distance the car in front has to immediately broadcast changes in it’s speed to the car on the back.
By transmitting that kind of information the car in front gives the car in the back a benefit. It would make sense that the car in the back pays the car in front. That’s where you need a digital currency.
However you want a currency with a stable value and therefore you might want to use something different than bitcoin.
When cars merge in traffic you also have some cars providing a benefit to other cars. There also the possibility to price those benefits and do digital transactions.
You don’t want that some cars hoard all money that they get this way but that they spend it. Making profit isn’t really the point.
I personally think that Ripple and Stellar and better for such an occasion than a blockchain based system because of lower transaction fees but it’s still worthwhile to talk through possible crypto-systems.
Most companies that today accept bitcoin don’t hold bitcoin for a while but immediately transfer it into dollar. It’s not really a problem for a person who doesn’t plan holding currency for a while.
On the other hand the aspect that you don’t want to hold the currency for longer periods of time might reduce speculators in the market and produce a currency with less price fluctuation then bitcoin.
A couple of points that I think are relevant:
First, dividing users of bitcoins into people who spend it quickly and those who hold it obscures the more fundamental truth that all bitcoin users hold them for some period of time.
Second, all businesses have cash holdings. Larger ones have entire treasury departments devoted to doing nothing more than getting a few more basis points on that cash by active management in interest bearing accounts.
The combine to make me very skeptical that people will accept a currency that depreciates in value and is not already accepted. Imagine the interest rate that they would have to obtain just to offset the decay fee. If prospective users know that they can’t get such an interest rate, why would they ever sign up for a system that guarantees them a loss?
It doesn’t guarantee a loss, the system is zero sum. People who hold money for longer time lose but other people win because that money is transferred to them.
Let’s say you have two self driving cars. If they drive together with 1 meter of distance between them the car in the back is in the slip stream of the first car and therefore needs less energy to drive. On the other hand to be able to drive in that distance the car in front has to immediately broadcast changes in it’s speed to the car on the back.
By transmitting that kind of information the car in front gives the car in the back a benefit. It would make sense that the car in the back pays the car in front. That’s where you need a digital currency. However you want a currency with a stable value and therefore you might want to use something different than bitcoin.
When cars merge in traffic you also have some cars providing a benefit to other cars. There also the possibility to price those benefits and do digital transactions.
You don’t want that some cars hoard all money that they get this way but that they spend it. Making profit isn’t really the point.
I personally think that Ripple and Stellar and better for such an occasion than a blockchain based system because of lower transaction fees but it’s still worthwhile to talk through possible crypto-systems.