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Why would anyone want BTC to be a national currency when a deflationary asset in a debt based economy would increase debt owed?

I’m unsure if the title is phrased sufficiently and so i’ll try to explain;
(As a side note I am very much an advocate for cryptocurrency use and the ideation behind it however i recently thought of this and cant think of a sufficient answer myself)

As the supply of bitcoin available decreases and the block rewards decrease, this would generally increase the price of BTC, even more so if the demand increased.
Now assume that a country was to use BTC as it’s native currency, demand would increase while the supply remains unchanged – this would cause the price to increase.
If anyone in this country was to take out a loan that is BTC denominated (as it is now the country’s native currency), as the value of BTC increases the debt owed increases and so the wealth gap between the rich, who have no need for loans, and the poor, who rely on loans, increases.

This doesn’t seem to be a viable option, especially considering the huge role debt plays in the economies of today.

Thoughts?

What do you think?

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10 Comments

  1. As opposed to the fiat world where debt driven bubbles of massive levels of malinvestment inevitably pop? Where the wealthy who know the game sweep up all the hard assets for cheap every decade or so? Crushing the average man fooled by cheap money who get in over their heads during the irrational exuberance phase.

    Bitcoin at full adoption should only appreciate inline with global GDP. Holding BTC will be the “risk free rate”. Investing will be more discerning with rates set by the market rewarding those who allocated into ideas will real consumer demand. Bad ideas are exposed sooner in a fair system of profit and loss. A level playing field with the rules the same for all.

    A hard money world will be different from today. Difficult for us to imagine as it’s unlike what we are use to. Yet the high velocity trash economy is not something we should be trying to preserve.

  2. Already in today’s system when anyone takes out a loan has to pay back more.. nothing changes in that aspect. whats your point? Btw, it is only in the usa that poor people rely on loans.

  3. I have been thinking the exact same thing. There has to be a workaround, debt wise. For example Loaning BTC like you said and then borrowing usdc or another stable coin against it. The BTC will get locked as colleteral and can only get unlocked by the same amount of coins that got borrowed against it. This way people would get their funds and have a hedge against BTC volatility. They just have to repay the dollar value they borrowed and can give back the BTC. OFC, they would have to pay double interest, but maybe there will be a service for that with generous package deals.
    But smarter guys than me will probably have arguments against it incoming in 3…2…1….πŸ‘‡πŸ»

  4. Bitcoin won’t replace fiat currency, it will work alongside it. Taking out a loan in Bitcoin would never make sense. Taking a fiat loan and paying it back in Bitcoin also makes sense.

  5. Not an economist, but seems to me, the rising value of bitcoin is only in relation to other currencies, so perhaps it’s not an issue? If bitcoin were the national currency, we can assume people get paid in bitcoin. Therefore, the debt and earnings are on the same level regardless.

    For example, when the USD goes up, my credit card debt doesn’t “get bigger” nor does it get smaller when the USD GOES goes down.

  6. If you abandon your assumptions, you can accept any possibility
    It’s fairly obvious that believing “Bitcoin as national currency” requires abandoning credit
    Now, nobody’s borrowing or lending anything, so 13 lines of your post vanish, and nothing is left. You don’t have a question to discuss

    Bitcoin will never be a national currency, for other reasons, so these discussions are pointless

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