Sometimes when I think about economics and bitcoin, I compare it to a video game I have played when I was a kid, – Maple Story.
For those who aren’t familiar with this game, it’s an online 2d game, you can buy & sell items, upgrade them and build your character, etc, just like WoW and other similar games.
What amazes me is that fact there was free market. Let’s forget about the fact that people could get advantage by wasting real $ and buy in game items, there were free markets by all means, people used to let the market decide the price of every item, the most expensive items were the ones who have been finite in their quantity and considered rare, big part of these items were just collectibles, they had no use rather than “show off”.
The max amount of money (mesos) you could hold was 2,147,483,647 and everything had the same price for years and most of those collectible rare items even raised in price through the years.
Until the game master interfered.
They have raised the max amount of money you could hold to 9,999,999,999, they made money to be easier to get (for example instead of 1 meso for every monster you’ve killed, they now awarded you with 10), and created version 2 for some of the collectible items. Prices quickly raised, the version 2 collectibles have cut the price of version 1 collectibles, but those items who have never been replicated since introduced, immediately raised in price and followed the inflation. People (including me) were frustrated because of the game masters behavior, and the game was, and now is dead.
That leads me to a question, how is that different from our real world? Banks are continuously raising the supply of our day-to-day money which is dollar for the most of us (dollar being the reserve currency of the world), I can compare version 2 collectibles to houses in the real world, for the reason that houses aren’t really following the inflation, because we build new houses and the speed of construction is getting faster and faster through the years, and every other asset is in some way expandable in supply, but bitcoin. I could compare bitcoin to those in game rare collectible items, that had no real use rather than show off, same with bitcoin, it doesn’t have any other use rather than the ability to transfer wealth from one place to another (Peter Schiff says this is a disadvantage).
I have also thought about this, and why would something that we call money to have any other user rather than anything related to payments, transfers, and money? Ok cool so gold can be used as jewelry, but gold isn’t priced 1500$ per ounce because of its use as jewelry material. Saying that bitcoin isn’t going to work because it doesn’t have any use rather than transfers online is like buying a wash machine and complaining that you can’t use it as a table.
*Hope you guys understand everything, English isn’t my first language so I might have some grammar mistakes, if there’s anything you can’t understand please let me know and I’ll explain.
Have a great weekend everyone!