Liquidity, a highly desireable property of currencies, is confered by virtue of 'healthy' levels of inflation. Bitcoin is, somewhat by structure, lacking in inflationary pressures, leading to the tendency for it to behave as a commodity, which makes it undesirable as a currency.
While commodities can't inflate like a fiat currency, the rate of change of supply for most commodities can respond to changing demand to at least some extent. For example, take fossil fuels: we've known about the potential of oil sands and fracking for a very long time, but nobody bothered with them because the price wasn't high enough to make it worthwhile to chase after those sources. Now that's changing, and the extra fuel that comes from exploiting them helps to keep the market price a bit more stable.
Bitcoin, by virtue of having a pre-determined and constantly diminishing growth rate, doesn't even have that. Which makes it even less desirable a form of currency. It's like an instant deflationary spiral. Just add economy!
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Liquidity, a highly desireable property of currencies, is confered by virtue of 'healthy' levels of inflation. Bitcoin is, somewhat by structure, lacking in inflationary pressures, leading to the tendency for it to behave as a commodity, which makes it undesirable as a currency.
While commodities can't inflate like a fiat currency, the rate of change of supply for most commodities can respond to changing demand to at least some extent. For example, take fossil fuels: we've known about the potential of oil sands and fracking for a very long time, but nobody bothered with them because the price wasn't high enough to make it worthwhile to chase after those sources. Now that's changing, and the extra fuel that comes from exploiting them helps to keep the market price a bit more stable.
Bitcoin, by virtue of having a pre-determined and constantly diminishing growth rate, doesn't even have that. Which makes it even less desirable a form of currency. It's like an instant deflationary spiral. Just add economy!