> An upward price trend (existing for whatever reason) encourages hoarding, which reduces liquidity. This creates a feedback loop, resulting in bubbles and crashes.
A downward price trend encourages splurging, which provides excessive liquidity. This creates a feedback loop, resulting in Zimbabwe. Bitcoin opponents have a vested interest; the desire to attack something you missed out on due to your own lack of foresight is a known psychological effect. I don't necessarily believe all of the above, but it's a pretty symmetric mirror image of the opposite argument. You could go up a notch and make the case that inflation is worse because at least an upward bubble has to end eventually whereas a downward crash can keep going down forever until the currency is replaced. I'm known for my stance that finite supply cryptocurrency is probably more deflationary than optimal (though my concerns are more about wealth concentration and the potential for use of seignorage revenue for secondary purposes rather than some idea that spending is good), but there are good reasons why one might think otherwise.
As for gold, an important point is that gold's volatility is quite recent. Before 1971, and especially before 1913, it was actually quite stable:
Yes, that's a 6x margin that maintained itself over six centuries. The 18th century fall and the 16th century fall can likely be attributed to the sudden introduction of new supply in North America; that's an uncertainty that cryptocurrencies do not have. I don't know why gold was stable before but is not now; perhaps it's the fact that a fixed-supply commodity is stable if used as a currency but not stable if used as a form of black-swan insurance. The former use case might have more constant demand, or price stickiness might play a role.
I'm honestly not sure what will happen. Maybe cryptocurrencies will die, maybe BTC will die but others succeed, maybe BTC will become gold 2.0 and other currencies will take on other roles (if this happens, environmentalists at least would be quite happy given gold miners' current track record), or maybe something else entirely. I do agree one-world-currency domination is exceedingly unlikely though.
A downward price trend encourages splurging, which provides excessive liquidity. This creates a feedback loop, resulting in Zimbabwe. Bitcoin opponents have a vested interest; the desire to attack something you missed out on due to your own lack of foresight is a known psychological effect. I don't necessarily believe all of the above, but it's a pretty symmetric mirror image of the opposite argument. You could go up a notch and make the case that inflation is worse because at least an upward bubble has to end eventually whereas a downward crash can keep going down forever until the currency is replaced. I'm known for my stance that finite supply cryptocurrency is probably more deflationary than optimal (though my concerns are more about wealth concentration and the potential for use of seignorage revenue for secondary purposes rather than some idea that spending is good), but there are good reasons why one might think otherwise.
As for gold, an important point is that gold's volatility is quite recent. Before 1971, and especially before 1913, it was actually quite stable:
http://www.zerohedge.com/news/charting-price-gold-all-way-ba...
Yes, that's a 6x margin that maintained itself over six centuries. The 18th century fall and the 16th century fall can likely be attributed to the sudden introduction of new supply in North America; that's an uncertainty that cryptocurrencies do not have. I don't know why gold was stable before but is not now; perhaps it's the fact that a fixed-supply commodity is stable if used as a currency but not stable if used as a form of black-swan insurance. The former use case might have more constant demand, or price stickiness might play a role.
I'm honestly not sure what will happen. Maybe cryptocurrencies will die, maybe BTC will die but others succeed, maybe BTC will become gold 2.0 and other currencies will take on other roles (if this happens, environmentalists at least would be quite happy given gold miners' current track record), or maybe something else entirely. I do agree one-world-currency domination is exceedingly unlikely though.