Sleeping beauty Bitcoin wallets wake up after 14 years to the tune of $2B

Personally I think that this can be considered on the "bug" side of Bitcoin's finite number coins: if, over time, they are lost, then there's a smaller quantity† of currency that is useable to actually do stuff with.

This can make the 'rate of deflation' that occurs worse:

* https://en.bitcoin.it/wiki/Deflationary_spiral

* https://isps.yale.edu/news/blog/2014/06/the-perils-of-bitcoi...

* https://crypto.bi/deflationary/

† I am aware of satoshis.

When I listen to Bitcoin discussions, one of the advantages people bring up is that there is a limited number of it and you can’t just “print” more.

Considering this, while it is true that all this makes deflation worse, I’d assume most bitcoin hodlers would not mind this.

It is under-appreciated that inflation actually is desirable in a working economy.

Look at it this way. If your money (in money form) is worth less tomorrow than today, you are incentivised to spend it, thus fueling economic activity of all sorts (from going out and buying a drink to buying a car, traveling, investing). If your money is worth more tomorrow, then you are incentivised to tighten your belt and not spend for as long as you can. At scale, this negatively affects production, economic mobility, and so forth; the rich get richer and hoard the money. I do not believe any of today’s economies can be healthy and competitive (or even functional) with a deflationary currency.

The US currencies were either literal precious metals, or gold-backed and/or silver-backed, throughout the 19th century until the Great Depression, except for a couple of brief suspensions. Consequently the average rate of inflation was zero. That was the period that it went from a fractious group of rebel colonies to the center of world economic development. So, while I'm sympathetic to the idea that a fiat currency with a predictable inflation rate might stimulate the economy, I think you are making an unjustifiably strong case for it.

Britain coming off the gold standard made the pound more competitive. Prior to that, when pound was backed by metals, they increasingly suffered high unemployment, runs on gold and everything.

In the US it was nothing good either after a few years since WWI: manufacturing fell, unemployment rose[0], etc. I guess it did not help that Britain ended the gold standard which helped their exports, and US adopted protectionist policy which tanked its trade. I don’t need to retell this all but basically the depression ended with the US abandoning the gold standard and entering controlled inflation.

Perhaps the reason for these rosy takes on deflationary currencies in the US is that not many people are still alive who lived through the depression…

By the way, the US did suspend the gold standard during WWI. Why, you ask? Well, it so happened that some debt was due, plus people from across the pond were selling stocks in US companies, and so what happens at that point (when you don’t have much monetary control) is ships full of US gold floating off into the misty ocean.

Correct me if I am wrong, of course.

[0] “Did you know that every 1% the unemployment goes up, 40 000 people die?” — The Big Short.