I’m reading Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money
The typical non-gold-backed currency moves in the opposite direction. The BLS says that a $1 item in 1913, for example, would cost $24 today due to what a politician would call “healthy inflation” or “currency debasement” depending on whether his or her party happened to be in power.
What are other examples of currencies that have done something similar to Bitcoin?
taxi medallions
Gold.
Hi Philip,
During 1930–1933 the rate of deflation was approximately 10 percent/year in the US – not nearly as high as your Bitcoin example. https://en.wikipedia.org/wiki/Deflation#Historical_examples_of_credit_deflation
Also, this person believes Bitcoin hyperdeflation is different in nature than deflation for a typical currency http://www.forbes.com/sites/timothylee/2013/04/01/no-bitcoins-arent-in-danger-from-hyperdeflation/
Cheers, Patrick
Russell: I was really asking about “non-gold-backed” currencies.
https://smaulgld.com/homes-priced-in-ounces-of-gold-and-silver-charts/ makes it look as though gold is much more stable than Bitcoin in terms of its long-term purchasing power (e.g., an average house today and in 1965 cost about the same number of ounces of gold).
(See also http://blogs.wsj.com/moneybeat/2015/07/17/lets-be-honest-about-gold-its-a-pet-rock/ )
Swiss franc?
Iraqi Swiss Denar was an actual example of this type of synthetic commodity money.
Izzie: http://www.tradingeconomics.com/switzerland/inflation-cpi says that “Inflation Rate in Switzerland averaged 2.54 percent from 1956 until 2015”
It’s not so much that Bitcoin is ‘basing’ so much as other currencies are experiencing massive debasement in comparison. As Dollars and Euros experience periodic bouts of flooding into the metronomic certainty of Bitcoin’s core attributes – programmed rate of issuance, uninterdictability, and lack of physicality – we’ve seen a number of bubbles, pops, and higher-level resettling of Bitcoin’s ‘price.’ (I use quotations because one bitcoin is always equal to one bitcoin.) This is no surprise given that the world’s fiat printing presses are running hotter than hell at the moment.
This having been said, Bitcoin’s inflation rate is essentially zero because not only is its mining rate known for the next 125 years in advance, but it also prices you in.
Pretty nifty, eh ?
Look at Swiss Franc vs. US$ over time.
The best answer to your question may be rhetorical: “What other currencies have maintained a limited supply?” I am not aware of any and am under the impression that it is not in the interest of central authorities to place a hard limit on supply, which is why there may be no other practical examples like bitcoin (which is maintained with math instead of a government).
Maybe you were hoping to elicit answers like this to confirm your suspicion?
It seems as if the law of supply and demand has so far imparted significant merit to a limited set of units that anyone can own and exchange freely. Although the Bitcoin network is complicated the result is both remarkably simple and unprecedented.
There are no examples of things that have done anything even remotely similar to Bitcoin (which, notably, is not a currency – not anymore than electricity is “a lightning”, at any rate).
If you consider bitcoin a thing instead of a currency there are a lot. Monet paintings, Harvard degrees, bits of land in Manhattan.
Bitcoin is traded against other fiat currencies like the EUR, GBP and USD (among others) at places called currency exchanges like exchange.coinbase.com where computers (and you) can watch order book flow and manipulate bid-ask spreads in anticipation of big moves just like traditional currency exchanges. You can use Bitcoin to buy stuff from overstock.com, hotels on expedia.com and airline flights from cheapflights.com
Google Finance has even given Bitcoin a chart on its platform and labels the page Currency: BTC
Why would someone feel compelled to declare that Bitcoin is not a currency?