Level-headed answers from AA the bitcoin expert.

Wow, how did the coffee taste? (Chuckle)
Thanks AA

Meh, OpenAlias (https://openalias.org) already solves the Bitcoin address problem, and it does it for all cryptocurrencies.

I totally dig this dude :-)

Bitcoin scalability is not a problem right now, but it could become a problem very quickly, but its better to respond to problems when they actually happen, so let's not address it until it's a crisis...very smart.

"I bought a pound (lb) of coffee for about $1200 in today's money" This is one of the main problems of bitcoin as a currency, it's deflationary. IMHO this makes BTC more suitable as an investment asset rather than money.

That's not due to deflation, that's volatility. The built in deflation will come in to play when everything is mined because people loose passwords and USB sticks etc which slowly shrinks the monetary base. So it's a pretty weak deflation, which is not a problem at all, and as long more mining is done than loosing coins, it's actually inflationary. The demand side of btc, not the supply side which is is very predictable, is what drives the wild price swings.

I think that with the present stock plus the pre-set issuance of BTC the market anticipates continuous appreciation long term that will accentuate as the issuance diminishes and the demand continues to increase due to growth in adoption.

Donald, relative to computer hardware, the dollar is deflationary. But when people need to upgrade, they spend dollars to buy computers. The only thing a price deflationary currency will change is the proportion of income that people save now to consume later. The best part is that people can unplug from pension funds, stock exchanges and mutual funds altogether.
The coffee example can be used to illustrate that the virtue of saving stems from real incentives.

Thank you Justin, although I live in the US now, my example and experience is the opposite which is in my country, Argentina:

Because the expectation is that the currency will devalue Argentinians tend to spend their whole salary as soon as possible in order to capture the most amount of value from their income. Savings rates in general are low in times of money printing and inflation.

Although I don't have experience in the opposite environments, by logic I would expect people to save more and restrict spending in a deflationary economy.

In a double currency environment Argentinians tend to use the dollar as a savings asset rather than day to day money. The peso circulates at high velocities.

But I don't deny your argument above, maybe you are right and BTC is good as currency too.

I also live in a high inflation country although nothing like what Argentina is going through. The interesting thing about bitcoin is that, up until now the world has always moved from a deflationary currency to an inflationary fiat. I don't think we have examples of countries moving from fiat to asset based or deflationary. The best we have is inflationary currencies transitioning to less inflationary. So like the way the zim dollar gave way to the US dollar.
We're interesting new territory. It will be interesting if a fiat currency can be displaced by a deflationary currency without legislative push.

I agree, we are totally in new territory.

Deflationary is fine with me. Borrow in government fiat speculating that inflation will once again set-in. Maintain a float in bitcoin for use in functional transactions, investment and gifting. Who would want to give a friend a depreciating asset like fiat? Lets not forget that we must do our part to expand growth of GDP with new debt creation or the liquidity trap will bite once more;)

I think what you describe is what will happen, high velocity fiat for day-to-day living, and BTC (and other crypto) for savings and other "value preserving/appreciating" activities.

or services like btireserve.org for both

Your assumption of Bitcoin's "inflation" is only true if the rate of adoption has already reached it's peak. As we are nowhere near saturation, more users are coming into the network every day. As they do the demand will increase. Currently adoption is withdrawing, because a majority of the funds coming into Bitcoin were most interested in short term gains, and not in using Bitcoin as a means of transacting, and storing value.

I expect the power dynamic to change as today's current market leaves fewer more secure, efficient, fast, and portable investment opportunities by the day. Within 2 months you aren't going to be able to sit because of how swollen your ass is from kicking it with your own foot for not getting in on the prices we've seen over the last few days.

-Oz

not an assumption, fact ;). But I think I know what you mean, you're mixing up inflation and depreciation. Many people do that. Inflation just mean that the monetary base expands/inflates which in the case of bitcoin, it will do until everything is mined. Inflation leads to lower price (depreciation) IF demand is constant. In the case of bitcoin, it has been anything but constant, and while it's been going down lately, it's been going up a lot since start, easily negating the small depreciating effect of the built in inflation in the protocol. And I agree that these prices are just insane, I'm buying as much as I can afford. I wouldn't try to predict the price in one month or one year, but in 5 years it will be very high unless another crypto takes over.