<blockquote>
  <p>Question: how is this planned to function in a bitcoin only future???</p>
</blockquote>

<p>They can use their assets as collateral for the loan. </p>

<p>The price of Bitcoin (measured in chicken eggs, for example) doesn't necessarily need to increase when somebody takes out a new loan. The price of fiat doesn't change when people take new loans either. </p>

<p>(If workers become more productive and their pay correspondingly increases, the employer may require more money to fund their working capital, but their cost structure doesn't change - the workers help them earn more and the employer pays them approximately the same percentage of their earnings as before. There it is unlikely that everyone would have to use Bitcoin - if Bitcoin gets used on a large scale, that means multiple crypto-currencies would be in circulation.)</p>

<blockquote>
  <p>Second Question - if what I suppose in the first question is in fact the vision (please correct me if im wrong!), why would anyone ever spend?</p>
</blockquote>

<p>Gold mining generated approximately the same amount of new coins as Bitcoin mining and people would still spend their gold (and silver and stock certificates and diamonds and other savings and assets).</p>

<p>Things worked well before today's fake fiat money existed, and will work equally well after it gets destroyed. </p>

<p>You can learn about it from books and materials discussing how it was before central banks instituted state-sponsored plunder. </p>

CC BY-SA 3.0
2017-12-09T09:55:08.443Z
2017-12-09T09:55:08.443Z
whatever
<blockquote>
  <p>Second Question - if what I suppose in the first question is in fact the vision (please correct me if im wrong!), why would anyone ever spend?</p>
</blockquote>

<p>Why would anyone spend now? You could buy a nice laptop for $2k today, but if you just invest that into the stock market you can expect to have twice that in around 7 years. The only difference is that the time frame might be smaller if you invest in Bitcoin or other cryptos. Your incentives to spend/save remain more or less the same.</p>

CC BY-SA 3.0
2018-02-07T18:24:23.103Z
2018-02-07T18:24:23.103Z
Dan Mandel
<p>Been keeping track of BTC for a while and have always had these nagging questions about its feasibility as the "future" of currency. I like all the not tracked, no third party involvement, etc (i.e. all the advantages of having an online currency that should most of the time be safe).</p>

<p>However, in economic terms I have always had a hard time getting my head around how it would feasibly work as the prime currency of a country (to keep it simple).</p>

<p>I guess the closest analogy there exists of such a system is the gold standard right way back when. However, and please correct me if I'm wrong, the issues with the gold standard, principally that when theres no more new gold, theres no more growth, doesn't apply to bitcoin. From posts on this sub and others, it seems that the vision is that when bitcoins stop being made, whenever more money supply is needed, the demand for bitcoin will increase and thus price will as well, thus allowing for a smaller fraction of a bitcoin to be worth more (please tell me if I am understanding this very incorrectly). For example, .01 bitcoins at bitcoin price of 50 dollars isn't much but .01 bitcoins at current bitcoin price is nice.</p>

<p>Thus, in an all bitcoin economy, this sort of argument would imply the price of bitcoin will continue to rise forever, as long as there is growth (i.e more demand for me bitcoins).</p>

<p>So that doesn't really make much sense to me. Growth in this crypto only world doesn't make much sense to me. . The thought experiment that I have been slowly developing but I can't seem to figure out (probably because of lack of bitcoin knowledge and effort) goes as follows:</p>

<p>Say we have gotten to cap of 21,000,000 bitcoins in the crypto-currency only economy (lets contain it to one country). Lets say that 1 bitcoin = 1,000,000 dollars - I know tha it doesn't make sense to compare it to dollars in a crypto only economy - so lets say instead that .001 bitcoins gets you a very very nice high quality TV. So thats the bitcoin relative price context. Now lets say that our crypto economy is doing well, people are working yea yea and are getting hired and productivity is up and so wages are up (woohoo!), so companies have to pay more bitcoins to their workers. -Here is my first confusion in a bitcoin economy-. In our fiat currency economy, when this happens, companies usually borrow money from banks (who were given it by printing money from FED) and they can fund these larger wages and hire-ings and technology advancement (we could obviously discuss the merits of having inflation baked into growth into our current system, but its not really the subject). <strong>Question: how is this planned to function in a bitcoin only future???</strong></p>

<p>Is the price of bitcoin suppose to increase here, so that a smaller percentage of the bitcoin, (i.e. 10% of ancient bitcoin price, i.e. .0001) can buy the same tv as before thus in essence having 10x the money supply (in my hypothetical scenario here). If this is the vision, then what are the mechanisms for the increase in bitcoin price? How is the relative price of bitcoin compared to all goods actually increasing (demand by whom?). </p>

<p><strong>Second Question - if what I suppose in the first question is in fact the vision (please correct me if im wrong!), why would anyone ever spend?</strong></p>

<p>If I know that when there's growth, the relative price of my money goes up, I will just never work and wait for growth to drive my bitcoin price up in effect making me richer by sitting there (I may have not understood something really fundamental here cause this really just doesn't work like that does it?).</p>

<p>Essentially this scenario is the one that I've been trying to wrap my head around. I don't expect some full holistic answer to the whole scenario, just want to understand if this is how bitcoin believers envision an economic system based crypto currency behaves, and how they actually envision it. thanks for any input! Also, If I have stated any complete fallacies or falsehoods, let me know, I think it is at least clear what my question is.</p>

<economic-theory>
How would debt work in a bitcoin only economy, and why would anyone ever spend?
user67874
# How would debt work in a bitcoin only economy, and why would anyone ever spend?

(Asked by: username_0 on 2017-12-09)

Been keeping track of BTC for a while and have always had these nagging questions about its feasibility as the "future" of currency. I like all the not tracked, no third party involvement, etc (i.e. all the advantages of having an online currency that should most of the time be safe).

However, in economic terms I have always had a hard time getting my head around how it would feasibly work as the prime currency of a country (to keep it simple).

I guess the closest analogy there exists of such a system is the gold standard right way back when. However, and please correct me if I'm wrong, the issues with the gold standard, principally that when theres no more new gold, theres no more growth, doesn't apply to bitcoin. From posts on this sub and others, it seems that the vision is that when bitcoins stop being made, whenever more money supply is needed, the demand for bitcoin will increase and thus price will as well, thus allowing for a smaller fraction of a bitcoin to be worth more (please tell me if I am understanding this very incorrectly). For example, .01 bitcoins at bitcoin price of 50 dollars isn't much but .01 bitcoins at current bitcoin price is nice.

Thus, in an all bitcoin economy, this sort of argument would imply the price of bitcoin will continue to rise forever, as long as there is growth (i.e more demand for me bitcoins).

So that doesn't really make much sense to me. Growth in this crypto only world doesn't make much sense to me. . The thought experiment that I have been slowly developing but I can't seem to figure out (probably because of lack of bitcoin knowledge and effort) goes as follows:

Say we have gotten to cap of 21,000,000 bitcoins in the crypto-currency only economy (lets contain it to one country). Lets say that 1 bitcoin = 1,000,000 dollars - I know tha it doesn't make sense to compare it to dollars in a crypto only economy - so lets say instead that .001 bitcoins gets you a very very nice high quality TV. So thats the bitcoin relative price context. Now lets say that our crypto economy is doing well, people are working yea yea and are getting hired and productivity is up and so wages are up (woohoo!), so companies have to pay more bitcoins to their workers. -Here is my first confusion in a bitcoin economy-. In our fiat currency economy, when this happens, companies usually borrow money from banks (who were given it by printing money from FED) and they can fund these larger wages and hire-ings and technology advancement (we could obviously discuss the merits of having inflation baked into growth into our current system, but its not really the subject). **Question: how is this planned to function in a bitcoin only future???**

Is the price of bitcoin suppose to increase here, so that a smaller percentage of the bitcoin, (i.e. 10% of ancient bitcoin price, i.e. .0001) can buy the same tv as before thus in essence having 10x the money supply (in my hypothetical scenario here). If this is the vision, then what are the mechanisms for the increase in bitcoin price? How is the relative price of bitcoin compared to all goods actually increasing (demand by whom?).

**Second Question - if what I suppose in the first question is in fact the vision (please correct me if im wrong!), why would anyone ever spend?**

If I know that when there's growth, the relative price of my money goes up, I will just never work and wait for growth to drive my bitcoin price up in effect making me richer by sitting there (I may have not understood something really fundamental here cause this really just doesn't work like that does it?).

Essentially this scenario is the one that I've been trying to wrap my head around. I don't expect some full holistic answer to the whole scenario, just want to understand if this is how bitcoin believers envision an economic system based crypto currency behaves, and how they actually envision it. thanks for any input! Also, If I have stated any complete fallacies or falsehoods, let me know, I think it is at least clear what my question is.

**Tags:** economic-theory


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## 2 answers

### Answer by username_1 on 2017-12-09. Score: 1

> Question: how is this planned to function in a bitcoin only future???

They can use their assets as collateral for the loan.

The price of Bitcoin (measured in chicken eggs, for example) doesn't necessarily need to increase when somebody takes out a new loan. The price of fiat doesn't change when people take new loans either.

(If workers become more productive and their pay correspondingly increases, the employer may require more money to fund their working capital, but their cost structure doesn't change - the workers help them earn more and the employer pays them approximately the same percentage of their earnings as before. There it is unlikely that everyone would have to use Bitcoin - if Bitcoin gets used on a large scale, that means multiple crypto-currencies would be in circulation.)

> Second Question - if what I suppose in the first question is in fact the vision (please correct me if im wrong!), why would anyone ever spend?

Gold mining generated approximately the same amount of new coins as Bitcoin mining and people would still spend their gold (and silver and stock certificates and diamonds and other savings and assets).

Things worked well before today's fake fiat money existed, and will work equally well after it gets destroyed.

You can learn about it from books and materials discussing how it was before central banks instituted state-sponsored plunder.


---

### Answer by username_2 on 2018-02-07. Score: 1

> Second Question - if what I suppose in the first question is in fact the vision (please correct me if im wrong!), why would anyone ever spend?

Why would anyone spend now? You could buy a nice laptop for $2k today, but if you just invest that into the stock market you can expect to have twice that in around 7 years. The only difference is that the time frame might be smaller if you invest in Bitcoin or other cryptos. Your incentives to spend/save remain more or less the same.


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