Money system officially reversed by BoE

[SpontaneousOrder]

Yeah 'cos Bit Coins are safe.

But seriously fixed currencies ( such as gold backed paper ) suffer from deflation. That's why they were all ditched.

There's nothing wrong with deflation. In fact we should really be enjoying a deflationary monetary paradigm - everything (with some exceptions like food perhaps) should be getting cheaper as goods and services are developed more efficiently.

[SpontaneousOrder]

Until there isn't.

I'm not a cryptographer, but supposedly the cryptography is sound.

[SpontaneousOrder]

So there can only ever be 20M.

So what happens as the number of people using them increases? What happens to the "value" of each coin? It enters a deflationary spiral.

you mean inflationary? (i can only assume you're referring to price inflation rather than inflation of the money supply, seeing as the 'physical' supply is fixed).
Worth noting too that each bit coin is massively divisible, which means that there shouldn't be a shortage of currency - it just gets more valuable as it's adopted more.

[TykeMerc]

May I point out that ever since banking was invented and as a result the unit of exchange (or money as we call it) became a token it's ALWAYS been on an IOU basis. Nowt new here

[SpontaneousOrder]

May I point out that ever since banking was invented and as a result the unit of exchange (or money as we call it) became a token it's ALWAYS been on an IOU basis. Nowt new here

To be fair, most people presume that when you borrow 200 grand for a mortgage, the bank actually lends you 200k that existed in reserves or deposits of some kind. The idea that they just key into existence 200k that didn't exist until you borrowed it, and you owe it back with interest, is unimaginable to many (or I guess it;s more accurate to say that they lend out the same 200k simultaneously to many people, and you pay it back with interest. But it amounts to the same thing).