To understand bitcoin from the economic level, ordinary people do not need to review thousands of years' monetary history or know much about financial knowledge.
There used to be a nursery (yes, a nursery), but she was not a general nurseries, because her employees were the 150 people to work in the Capitol Hill. In fact, she is not a nursery school at all. It's exactly a babysitting co-op that the members of the Capitol Hill care for their children. In Washington, there is always a scene of debauchery social life, couples from time to time to enjoy two of the world, so maybe one day some parents will go out at night, can not take care of their children. Two times a good time, always to trouble other people to take care of their own children is not very good. So those smart people working in the US political center have come up with a good idea: to issue a "nanny coupon" inside the members of the child care cooperation organization, and each ticket corresponds to an hour's child care service. When an outgoing parent delivers the child to the care of a child, he must pay a nanny ticket and pay the number of hours according to the number of hours the other person takes care of his child. The number of babysitting vouchers is released at the beginning, and members can earn extra babysitting coupons for children's needs by taking care of children in idle night.
It seems to be a universal system, but it actually runs for some time and is almost on the brink of collapse. First of all, some couples who are having more time nowadays start to use these time to take care of children for others, accumulate more nanny coupons, so that they can make more flexible use of time later. As the number of the nanny coupons is certain, someone's hoarding will inevitably reduce the number of people's coupons. Those who had reduced the number of babysitters also began to panic. For fear that they would go out in the future, no one would take care of the children, so they reduced the number of times they went out, and began to take care of other children's money to earn extra tickets. All of a sudden, without new members and the birth of new babies, the vouchers for circulation became less and less. The result of the decrease of vouchers was that the babysitter service was also less and less. If the child is regarded as an economy, the nanny service looks at her GDP, which is the classic definition of a recession. The reason for the recession is the deflation in the economy, that is, the number of nanny coupons is not enough.
A story that is not my waffle this is Sweeney, the couple (members of childcare cooperation) published in 1977 entitled "the theory of money and power will mountain (Monetary Theory and cooperative care crisis the Great Capitol Hill Baby Sitting Co-op Crisis)" the economics papers. Remember this little story, not only helps you understand bitcoin, but also helps you understand why the Fed wants quantitative easing, and it can help you to see clearly the reason why the central bank plays the role of "lender of last resort".
At the end of the story, we look back at the bitcoin, and look at the features of the inflation prevention that she has been touting. The total amount of bitcoin is estimated to reach the limit of 21 million in 2140, and the money supply will stop, as the amount of the nanny coupons in our story no longer increases. And any monetary deflation characteristics will encourage hoarding (hoarding) behavior, everyone began to hoard money, money is more valuable, the output price relative decline, decline in output is the result of wages and the decline in demand, and lead to a decline in output prices, this is a spiral of deflation (deflation spiral). The nursery economy in the story is an economy that restricts the total output. However, a currency with deflation attribute or hold can't afford her. If it's put into a growth economy, the problem will be more serious. If she is really like some fanatical speculators, it will become the "future currency". "Global currency", the end of the global economy is just like the Capitol Hill Nursery.
Second, let's look at her centralization. In our story, why do the parents clutching the nanny coupons in their hands? Because they are all afraid, they are afraid of one day to use, but there is no voucher. If the management of the co - operatives can lend money to the members when they need money, they will be paid later. Parents are sure to reduce the number of nanny coupons held on their hands. At this time management plays the role of the lender of ultimate lender and does not need such a role in the world outlook of bitcoin.
So, I think Krugman's point of view is the most pertinent.
"At least for now, buying bitcoin is a good investment. But this does not explain the success of the experiment. The original intention of establishing a monetary system is not to make those who hold money rich, but to make the transaction convenient and benefit the whole economy. And none of these bits can be brought to us. "
"So buying into Bitcoin has, at least so far, been a good
But does that make the experiment a success Um No. What we? Want from a monetary system isn t to make people holding "money rich we want it to facilitate; transactions and make the economy as a whole rich. And that s not at all what is" happening in Bitcoin. "[1]