Bitcoins are awfully deflationary. This makes them a good investment, but isn’t healthy for a long-term bitcoin economy. Is there any way to program an electronic currency system that will make the creation of currency dependent on recent changes in value to maintain a stable value of currency? Like the Fed, except automated?
Is there any way to program an electronic currency system that will make the creation of currency dependent on recent changes in value to maintain a stable value of currency?
The short answer is probably yes, but the details haven’t been fully worked out.
See my old b-money proposal for some ideas on how to maintain a stable value for a cryptocurrency.
You might also be interested in a recent blog post by Eli Dourado on the economics of cryptocurrency, and my comment there.
You can prevent price from going up by printing more of the currency (and giving it to some Schelling point… the UN foundation?), but how do you prevent it going down?
Its called a Deflationary Bootstrapping Economy. A startup currency. A currency isnt good unless it is widely used. Bitcoins become widely used by providing the speculator reward incentive to be an early adoper and spread their use. Its a key feature that will make it successful.
Bitcoins are awfully deflationary. This makes them a good investment, but isn’t healthy for a long-term bitcoin economy. Is there any way to program an electronic currency system that will make the creation of currency dependent on recent changes in value to maintain a stable value of currency? Like the Fed, except automated?
The short answer is probably yes, but the details haven’t been fully worked out.
See my old b-money proposal for some ideas on how to maintain a stable value for a cryptocurrency.
You might also be interested in a recent blog post by Eli Dourado on the economics of cryptocurrency, and my comment there.
You can prevent price from going up by printing more of the currency (and giving it to some Schelling point… the UN foundation?), but how do you prevent it going down?
Its called a Deflationary Bootstrapping Economy. A startup currency. A currency isnt good unless it is widely used. Bitcoins become widely used by providing the speculator reward incentive to be an early adoper and spread their use. Its a key feature that will make it successful.