Author [EN] [ZH] [ES] [PT] [IT] [DE] [FR] [NL] [TR] [SR] [AR] [RU] [EN] [ZH] [ES] [PT] [IT] [DE] [FR] [NL] [TR] [SR] [AR] [RU] [EN] [ZH] [ES] [PT] [IT] [DE] [FR] [NL] [TR] [SR] [AR] [RU] Topic: BitShares fate under hyperinflation  (Read 803 times)

0 Members and 1 Guest are viewing this topic.

Offline karnal

BitShares fate under hyperinflation
« on: April 16, 2015, 08:22:28 PM »

Today I was wondering what would happen to the BitShares ecosystem, should the dollar experience hyperinflation.

If the information that the system will hold as long as BTS does not lose ~60% of value in a few hours is still correct, would this not spell the demise of the system in the case of hyperinflation followed by occasional (almost necessarily severe) bouts of deflation?

In other words, is the whole BitShares ecosystem tied to the fate of the contemporary elastic government/central bank-issued paper money?

« Last Edit: April 16, 2015, 08:26:03 PM by karnal »

Offline nomoreheroes7

Re: BitShares fate under hyperinflation
« Reply #1 on: April 16, 2015, 08:36:16 PM »
I think we'd be having much bigger problems in the world if the USD actually experienced hyperinflation...probably best to hope it just never happens.

Offline karnal

Re: BitShares fate under hyperinflation
« Reply #2 on: April 16, 2015, 08:55:20 PM »
Correct, but if this would render all of one's holdings in the BitShares system worthless (bitSilver, bitGold, etc), then it ought to be clearer. According to my understanding, yes, it would mean that all bitAssets would suddenly be worth nada.

Would that be the case?

Offline fuzzy

Re: BitShares fate under hyperinflation
« Reply #3 on: April 16, 2015, 09:12:53 PM »
Correct, but if this would render all of one's holdings in the BitShares system worthless (bitSilver, bitGold, etc), then it ought to be clearer. According to my understanding, yes, it would mean that all bitAssets would suddenly be worth nada.

Would that be the case?

I'm pretty sure this would not be the case unless all (or at least a large number) of the bitassets in circulation were rendered worthless overnight.  I actually think you will see people scammering to buy into bitGold, bitSilver and another number of bitassets when a hyperinflationary event happens in fiat currencies. 

It will probably have a time of great volatility (like all other markets) but will reach equilibrium over time as people adjust their holdings accordingly.  Let's not forget that when blood is in the streets there are going to be people prepared to make a lot of money.  It won't just be a bunch of people losing money--it will be a transfer.
WhaleShares==DKP; BitShares is our Community! 
ShareBits and WhaleShares = Love :D

Offline CLains

  • Hero Member
  • *****
  • Posts: 2610
    • View Profile
  • BTS: clains
Re: BitShares fate under hyperinflation
« Reply #4 on: April 16, 2015, 09:18:39 PM »
You have 5 dollars worth of BTS in a bucket (5 bitUSD). If USD hyperinflates your 5-dollar-worth-of-BTS-bucket has less BTS, because you can buy 5 dollars with less BTS. The person who created your USD sold them to get more BTS early on so he made a great deal, while you lost BTS because you held on to USD which fell in value. BitShares as a system doesn't lose anything, except perhaps bitUSD customers - but this would be weighed up by the increase in bitGOLD customers as fuzzy points out. ;)
Vote for BTS-2 witness: spectral (1.6.30)

Follow https://steemit.com/@clains

Offline karnal

Re: BitShares fate under hyperinflation
« Reply #5 on: April 16, 2015, 09:36:07 PM »
I'm confused, from memory (crap connection atm, can't really YouTube) one of the bitshares.tv videos mentioned that if BTS lost ~60% value in a few hours, then the system would collapse -- they even contrasted it with Bitcoin, being as volatile as it is, never having experienced such an event.



Offline CLains

  • Hero Member
  • *****
  • Posts: 2610
    • View Profile
  • BTS: clains
Re: BitShares fate under hyperinflation
« Reply #6 on: April 17, 2015, 12:13:37 AM »
I'm confused, from memory (crap connection atm, can't really YouTube) one of the bitshares.tv videos mentioned that if BTS lost ~60% value in a few hours, then the system would collapse -- they even contrasted it with Bitcoin, being as volatile as it is, never having experienced such an event.

If I want to create (lend into existence) 5 dollars worth of bitUSD, I have to lock away some BTS (say 10 dollars worth). This is to ensure that I have enough BTS to buy back the 5 bitUSD I borrowed. If the value of BTS drops dramatically, the amount I locked away will not be sufficient. The system monitors the situation, and uses the locked away BTS to buy back bitUSD when BTS falls "a lot" in value. If it falls too much too quickly (and stays down), however, the system won't be able to buy it all back at the right price.
« Last Edit: April 17, 2015, 12:21:26 AM by CLains »
Vote for BTS-2 witness: spectral (1.6.30)

Follow https://steemit.com/@clains

Offline merivercap

  • Hero Member
  • *****
  • Posts: 661
    • View Profile
    • BitCash
Re: BitShares fate under hyperinflation
« Reply #7 on: April 17, 2015, 03:20:35 AM »
I'm confused, from memory (crap connection atm, can't really YouTube) one of the bitshares.tv videos mentioned that if BTS lost ~60% value in a few hours, then the system would collapse -- they even contrasted it with Bitcoin, being as volatile as it is, never having experienced such an event.

BTS would be priced exponentially higher in hyperinflation, as would physical gold & silver and bitGold & bitSilver.   The US dollar and bitUSD would be worth much less or essentially worthless.  The system should work fine, but the demand for bitUSD would shrink immensely.  If there are bouts of rapid dollar deflation in between that may potentially cause some black swan events,  but again with the first bout of hyperinflation the bitUSD market would probably shrink to be a negligible amount relative to all the other bitAssets and any bouts of rapid deflation would be less consequential.   

Note: I have a friend who lived through hyperinflation in Vietnam and he said that ultimately even after hyperinflation when gold became extremely valuable, his mother would cut small pieces of gold to trade for goods that were still priced in Dong (Vietnamese currency).. hence even in hyperinflations people may still use US dollars as the unit of account.. it would just be valued exponentially less.   
BitCash - http://www.bitcash.org 
Beta: bitCash Wallet / p2p Gateway: (https://m.bitcash.org)
Beta: bitCash Trade (https://trade.bitcash.org)

Offline Ander

  • Hero Member
  • *****
  • Posts: 3507
    • View Profile
  • BTS: Ander
Re: BitShares fate under hyperinflation
« Reply #8 on: April 17, 2015, 03:57:17 AM »
OP you have it backwards.

If the USD has hyperinflation then BTS would go up in terms of dollars. 
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline rgcrypto

  • Hero Member
  • *****
  • Posts: 557
    • View Profile
    • Cryptoctopus Blog
Re: BitShares fate under hyperinflation
« Reply #9 on: April 17, 2015, 04:01:40 AM »
Here is a quote from Gary Halbert:

Quote
"If you and I both owned a hamburger stand and we were in a contest to see who could sell the most hamburgers, what advantages would you most like to have on your side to help you win?"

The answers vary. Some of the students say they would like to have the advantage of having superior meat from which to make their burgers. Others say they want sesame seed buns. Others mention location. Someone usually wants to be able to offer the lowest prices.

And so on.

Whatever. In any case, after my students are finished telling me what advantages they would most like to have, I usually say to them something like this: "O.K., I'll give you every single advantage you have asked for. I, myself, only want one advantage and, if you will give it to me, I will (when it comes to selling burgers) whip the pants off all of you!"

"What advantage do you want?" they ask.

"The only advantage I want," I reply...

"Is... A Starving Crowd!"

Think about it. When it comes to business, the most profitable habit you can cultivate is the habit of constantly being on the lookout for groups of people (markets) who have demonstrated that they are starving (or, at least hungry) for some particular product or service.

If hyper-inflation happens over in Canada or the US, I will stand at the corner and sell cryptocurrencies because FINALLY we would have a starving crowd for GOOD MONEY.

What it means for projects like BitShares? Mass Adoption.
« Last Edit: April 17, 2015, 04:03:41 AM by rgcrypto »

Offline mike623317

  • Hero Member
  • *****
  • Posts: 630
    • View Profile
Re: BitShares fate under hyperinflation
« Reply #10 on: April 17, 2015, 04:33:30 AM »
I think we'd be having much bigger problems in the world if the USD actually experienced hyperinflation...probably best to hope it just never happens.

They just printed 4 times the amount of currency supply with QE. inflation is an increase in the money supply. I think there are plenty of US dollars around the world that will ultimately come home and bid up prices. To what degree, who knows.

My own opinion is gold will in some way be monetized again. I want to own bitgold, not bitusd. Biitoil, bitsilver maybe even bitrmb.

Offline karnal

Re: BitShares fate under hyperinflation
« Reply #11 on: April 18, 2015, 04:49:47 PM »
OP you have it backwards.

If the USD has hyperinflation then BTS would go up in terms of dollars.

Yes. Until it doesn't, because of massive deflation, which in hyperinflation is more or less expected in extreme bouts - that should trigger the ~60% instant drop in value, and hence the thread.

The exact same thing happened for instance in the Weimar Republic.

Offline karnal

Re: BitShares fate under hyperinflation
« Reply #12 on: April 18, 2015, 04:51:37 PM »
Quote from: mike623317
I want to own bitgold, not bitusd. Biitoil, bitsilver maybe even bitrmb.

This is the reason I started the thread. Of course it is much simpler and easier and private to own bitGold rather than using BullionVault (for instance).

But if the (BitShares) system collapses due to the very reason that you're purchasing gold for [fiat currency, in particular de dollar, collapsing spectacularly]..

Offline Empirical1.2

  • Hero Member
  • *****
  • Posts: 1366
    • View Profile
Re: BitShares fate under hyperinflation
« Reply #13 on: April 18, 2015, 05:12:47 PM »
OP you have it backwards.

If the USD has hyperinflation then BTS would go up in terms of dollars.

Yes. Until it doesn't, because of massive deflation, which in hyperinflation is more or less expected in extreme bouts - that should trigger the ~60% instant drop in value, and hence the thread.

The exact same thing happened for instance in the Weimar Republic.

I don't think hyperinflation of currencies is a problem for BitAssets or BitShares to handle.
In hyperinflation the BitCurrency becomes worth less and less, so the relative value of the BTS collateral already backing becomes larger making that BitCurrency more secure.

In the Weimar republic I don't think there was massive bouts of deflation (60%+ over a few hours) during the hyperinflation but I don't know..

A possible problem is gold being rapidly revalued upwards perhaps as a result of a dollar collapse for example. Even in that event an individual BitAsset may be under-collateralised but the BTS system wouldn't collapse. I think BTS would probably grow in value vs. the dollar faster in that scenario anyway. 
« Last Edit: April 18, 2015, 05:28:13 PM by Empirical1.2 »
If you want to take the island burn the boats

Offline yiminh

  • Full Member
  • ***
  • Posts: 66
    • View Profile
Re: BitShares fate under hyperinflation
« Reply #14 on: April 19, 2015, 04:47:03 AM »
Today I was wondering what would happen to the BitShares ecosystem, should the dollar experience hyperinflation.

If the information that the system will hold as long as BTS does not lose ~60% of value in a few hours is still correct, would this not spell the demise of the system in the case of hyperinflation followed by occasional (almost necessarily severe) bouts of deflation?

In other words, is the whole BitShares ecosystem tied to the fate of the contemporary elastic government/central bank-issued paper money?

at current market cap, any BitAsset is a joke, it will collapse on its own weight regardless what the real USD will do.

 

Google+