All the characteristics mentioned in the other answers are derived from one basic need: constant value (in both time and space). A constant-value currency is needed to enable contracts to remain valid. The "price signal" is very important in economics. A changing currency is akin to redefining the length of second (especially if "time is money"). Prices and wages are derived from some underlying contracts. Shelf price may fluctuate, but the underlying contracts in commodities and wages are trying to keep the prices stable. A limited-quantity coin like bitcoin does not help them. If bitcoin rises in value from its imposed cap, it does not mean society is wealthier. It only means those who got in first get a larger piece of society's pie, at the expense of late-comers. The fear that it will collapse will cause new entrants to seek other coins that have demonstrated constant value. Those who do not fear a collapse and get in late will get burned. ( I have bitcoin and alt coins, so I think it's a long time in the future.) A producer of things society needs wants constant value. A speculator trying to gain without work wants a limited quantity coin.
A constant value currency will need to expand as its use expands. It also needs to expand if hoarders are accumulating faster than the expansion of the economy, or if they are accumulating in a way that does not benefit society. This will decrease the value of what they hold, giving good workers more power in the economy. Defining "benefit society" and "good workers" in my previous two sentences is the goal of democracy. Enforcing the definition is the role of government.
No comments:
Post a Comment