Of course Bitcoins can increase in value as well and make you a tidy profit if you time the market right. But the point is, people hold money because they know the amount of goods and services it will buy from one day to the next. Not at the moment and I suspect it will take a long time to establish.
As we discussed in class, an economy in which prices are continually falling is one in which everybody puts off buying until tomorrow when the prices are lower. This means that an economy with Bitcoins operating as the money supply will suffer from continual deflation and as a result suffer from recessions, falling incomes and rising unemployment.
Do we have that level of trust in the Bitcoin system. The reason is simple: Can we classify Bitcoins as money. Would you hold your wealth in an asset that fluctuates that widely in value. But try buying your groceries at Woolworths with a Bitcoin. But Bitcoins are also fundamentally flawed in a macroeconomic sense — Bitcoins have programmed in deflation.
I suspect most people would prefer to store their wealth in Australian dollars or other major currency because they know what the currency will buy them from one month to the next.
If that happened, the Bitcoin would instantly become worthless and Bitcoin-denominated wealth would be destroyed. Bitcoins might help if you want to buy something on Silk Road. A related issue is who or what. In terms of serving the unit of account function, Bitcoins could in principle serve this function quite well, as indeed can any numeraire i.
In the past, societies have used shells and cows as money, so Bitcoins can fulfill this function as well as any other. Bitcoins satisfy the medium of exchange function, which is to say people will accept Bitcoins as payment, in a very limited number of markets.
Something that fluctuates widely in value does not serve this function very well — one day a Bitcoin might buy you a mean at a fancy restaurant assuming you could find one that would accept it for paymentanother day you might be lucky to buy a loaf of bread with it.
Bitcoins are really not that good as a medium of exchange, at least at the moment, because they are accepted by only a tiny fraction of people and businesses in the economy.
The current design of the Bitcoin currency hardly has the same level of credibility or transparency that, for example, the Reserve Bank of Australia has built up over many, many years.
It would be very risky. This means they will become more expensive due to market forces over time, which is another way of saying that the goods and services a Bitcoin can buy will become cheaper over time. BUSS v2.
Topics: Finance, Stock Pages: 1 ( words) Published: October 28, In terms of this department, our main approach is to generate more funds by issuing shares and bonds to support the long term investment in other departments. The overall performance is just like the middle aged man, who has a relatively successful career, a.
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It did load properly while running Windows Sample Text: Sally usually purchases her dresses from a famous fashion designer in Sydney, `Fiona Edmonton'. However, due to the high rent she is paying and falling sales, Sally decides to purchase a shipment of dresses made in Burma, which cost significantly less than the stock she usually purchases.Buss3500 v2