December 16, 2013
Why Bitcoin Will Never Be a Currency — in 2 Charts

Falling prices sound like a good thing, but they’re not.

When prices fall, people put off buying things. And when people put off buying things, companies put off investing. And then the economy slumps—and keeps slumping. Even worse, people are stuck trying to pay back debts that don’t fall with wages that do. So bankruptcies pile up, and so do bank losses. That makes people too scared to borrow, and banks too scared to lend, which only makes prices fall even more.

This self-perpetuating cycle of doom is what sunk the global economy in the 1930s, and what, to a lesser extent, has sunk Japan since the 1990s. And it’s what has been sinking us since 2008, though this time central banks have at least kept prices from falling, just barely. 
Now, it doesn’t make much sense, but there’s actually a currency designed to create these kind of economic calamities. A currency designed for deflation. That’s Bitcoin, the virtual currency you can theoretically use to buy things online.
Read more. [Image: Reuters]

Why Bitcoin Will Never Be a Currency — in 2 Charts

Falling prices sound like a good thing, but they’re not.

When prices fall, people put off buying things. And when people put off buying things, companies put off investing. And then the economy slumps—and keeps slumping. Even worse, people are stuck trying to pay back debts that don’t fall with wages that do. So bankruptcies pile up, and so do bank losses. That makes people too scared to borrow, and banks too scared to lend, which only makes prices fall even more.

This self-perpetuating cycle of doom is what sunk the global economy in the 1930s, and what, to a lesser extent, has sunk Japan since the 1990s. And it’s what has been sinking us since 2008, though this time central banks have at least kept prices from falling, just barely. 

Now, it doesn’t make much sense, but there’s actually a currency designed to create these kind of economic calamities. A currency designed for deflation. That’s Bitcoin, the virtual currency you can theoretically use to buy things online.

Read more. [Image: Reuters]

9:31am
  
Filed under: Economics Currency Bitcoin 
  1. wallstreetlifestyle reblogged this from theatlantic
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  6. kaustubhraut reblogged this from theatlantic and added:
    pretty accurate
  7. life-is-too-short-to-be-sane reblogged this from astro-stoner and added:
    Bitcoin is already a currency, it has been widely used for a couple years, and each bitcoin is worth a little over $700,...
  8. astro-stoner reblogged this from theatlantic
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  16. hpgross reblogged this from theatlantic and added:
    So shut up about bitcoin except as a terrible investment decision!
  17. sosungalittleclodofclay reblogged this from theatlantic
  18. jishhd reblogged this from theatlantic and added:
    What a horribly under-researched joke of a news article. Shame on you, Atlantic.
  19. throughthelookingelk reblogged this from prismaticpastry
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  23. rhymeswithvinegar reblogged this from theatlantic and added:
    I’ve been trying not to make sweeping generalizations like this, but almost every single person I know that’s suuuuuper...