

On Bitcoin - ecounysis
http://ericsbasementoffice.com/2011/05/on-bitcoin/

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abulafia
Since bitcoins are inherently deflationary, it's hard to argue that they make
a poor investment vehicle. However, it's the inherent long-term lack of
liquidity that dooms this usage. To be viable in scale, a cash-replacement
like bitcoins needs to be highly liquid, but there are two effective choke
points to this specific hidden economy. The first is that conventional retail
businesses (as opposed to individuals) must accept the currency _in_scale_,
and there are a number of reasons this won't happen, including the trackablity
of bitcoin usage over the network (and inevitable IRS issues). The second is
that paypal, banks, etc, will shut down conversion sites, as paypal is already
beginning to do, and that will severely diminish the usefulness of the system.

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ecounysis
This does not matter if an economy develops which values bitcoins for the
goods and services they can be used to obtain. Currency is by its very
definition "liquid"

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adrianwaj
Bitcoins are inherently nothing. Either the hoarder injects them into active
circulation or a financial institution holding them will lend them out
(assuming such institutions will exist, and if they don't exist, there'll be
pressure for them to exist, either from present institutions or newly created
ones.) Don't underestimate banks' desire to accumulate whatever liquid assets
they can get their hands on. Goldman Sachs will realize this if no one else
does.

In any case, scarcity+marketplace has its own checks and balances.

