About bitcoin of accumulation-storage
On the Internet they are called HODLers - these are people who hold onto their bitcoins and refuse to spend them. Instead, they simply update their wallets, feeling richer every day, but not taking the time to consume.
Many of these growing millionaires live as beggars. I met many of them - across the United States, in Israel, in Brazil. They believe that every dollar spent today is two dollars, which you will not have in a few months. Perhaps they are right.
Bitcoin goes through a historical deflation, which means that its value increases with respect to products and services that can be purchased for it. This is the opposite of inflation, in which the value of the currency falls in relation to its purchasing power. Inflation inspires spending - it's better to get rid of money while they are most valuable. Deflation inspires saving - it's better to leave yourself something that makes your condition grow over time.
Therefore, there is nothing selfish, strange, or wild in the retention of an asset whose value is growing. It would be irrational to act in a different way. And there is nothing strange in insane expenditure on inflation, too. Our expectations from the future determine how we act now, and especially this is true in the sphere of the monetary economy.
Not bad money
The tendency of holding instead of spending generates a new claim. Bitcoin, you see, is not a viable medium of exchange. You can not buy a sandwich with it. Few people get a salary in Bitcoin. Retail accepts it reluctantly.
And it's true that most rich people just keep their money. James Mackintosh, author of the Wall Street Journal, makes the following conclusion:
"[Bitcoin] has become a libertarian means of accumulation because of the games of hordes of speculators attracted by wild price fluctuations."
I'm now looking at the full market capitalization of the entire crypto-currency sector - and it has exceeded $ 500 billion. Incidentally, this is more than the market capitalization of JP Morgan (372 billion). All this value is in private hands, and it grows at an incredible rate. Only in 2017 Bitcoin grew by 1000%, and many people already predict and higher growth in 2018.
Prerequisites
According to the old-fashioned Keynesian theory, economic growth comes from consumer spending, not savings, and so anyone who keeps money under the mattress hinders progress. Skopidoms are enemies.
"Any such attempt at simultaneous saving through a reduction in consumption would have an effect on income," he wrote. Keynes, "that it would inevitably lead to life counteracting factors."
He promoted what is now known as the "paradox of frugality." It must be counterintuitive. You think that saving the savings for the future is something good. However, you harm others and, in the long term, harm yourself. You should spend, even get into debt to spend.
But sometimes "counterintuitive" is just wrong. Like here. There is no paradox. Intuition is not mistaken. Thrift is good, both on a personal level, and for the whole society. Delaying consumption is a prerequisite for saving. Saving does not go to waste. Infinite savings, and the truth, is meaningless, but it works differently.
You always save for something. The final outcome of savings is consumption in some form. More important for economic growth, saving is a prerequisite for investment. Investment is something that complicates the structure of production. This leads to the hiring of labor, the growth of its specialization and, ultimately, to the growth of well-being.
Consider the classical case of the Crusoe Robinson on the island. Every day to eat, he goes and catches fish. He does not have time to spread the net, because he constantly fishes with a fishing rod. But at some point he realizes that he could catch more with the net. To gain time, he needs to stop fishing. He saves enough fish for a few days, so that he has what is available during the installation of the network. The network allows him to multiply the catch by a factor of 10. The postponement of today's consumption in favor of further prosperity moves progress.
Politics of robbery
Once the wrong (Keynesian) theory has spread, it has become a national policy of stimulating consumption through spending. People confiscated their gold. Government spending was believed to spur the economy and compensate for the existence or possibility of spending the people. The gold standard itself was destroyed in order to build a financial system that could be inflationary - with the expectation that money will be worth more today than in the future, which will create motivation for spending.
All this policy has turned into a catastrophe for economic growth. After the Second World War, the US experienced significant growth as a result of savings during the Depression and the War itself, and this was contrary to (and not because of) the federal policy
After this good start, the Federal Reserve embarked on an inflationary path. Personal savings jumped by 15%, but then the savers caught unawares the monstrous hyperinflation of the 70's, plundering the savings created over the past two decades. Not surprisingly, personal savings fell, revenues were blown away, and economic growth became more difficult than ever. In our time, problems with inflation have already been corrected, but now we are dealing with near-zero interest rates, which also does not contribute to saving.
fredgraph Personal savings as a percentage of disposable personal income
As can be seen from the graph, the economic crisis of 2008 traumatized the generation so much that people began to save much larger shares. There was no longer any trust in the system that was supposed to take care of them. It was at this point that Bitcoin appeared, and created something that, in fact, is the opposite of the dollar: a currency designed to increase in value over time.
Many metaphors in the Bitcoin environment appeared even in times of gold standard. We are talking about mining, for example, and the proof of the work done (imagine gold miners in jeans washing gold from the stream or miners carving in the rock). As with gold, there is a limit on the number of coins that can be created. And there are several levels of standards for determining authenticity and compliance in accounting. In a sense, Bitcoin was invented as the most anti-Keynesian financial instrument.
What's with thrift?
We see results now. Bitcoiners are HODlers. They save. They accumulate. They turned away from consumption in favor of saving. I see it all around. Young people investing in Bitcoin are not chasing luxury. They do not have cars. They ride bicycles and walk. They do not lower the state for dinner. They live on cheap products. They know that everything they spend on consumption today will eat their ability to consume, invest, and shape their condition in the future.
Here is the paradox of thrift. With Bitcoi thrift is an advantage. "Experts" can belittle it from morning to night. Bitcoin does not care. Moreover, you do not need to know the economic theory to understand this all. You just need to follow the money.
If ever you lose hope for a better future, just think how much capital is being created right now in the cryptosector. The time will come, perhaps in 5, 15 or 20 years, when all this deferred consumption will be taken off the chain to the world economy in the form of capital assets to promote prosperity and prosperity. Think about this: what concerns not just one economy or one nation. It's about peace, finances and prosperity in general without borders.
