These currencies will inflate in value as their network grows wider. Each new user adds value like a telephone network. Eventually, there will be a point where everyone who wants to be connected is connected, they have bought the bitcoin they want and bitcoin prices reach an steady state. At that point, it should be stable enough to use as a currency.
Its not MLM its network effects. Every node added to a transactional network adds real world value to that network. Its etreamly evident in telephone networks.
The reason people would want to buy bitcoin once it has grown out of its speculation is the vast marketplace of people and vendors who accept bitcoin as tender + the use of bitcoin as a hedge against the inflation of your local fiat currency.
It becomes another investment vehicle to diversify with.
MLM dynamics actually do apply to monetized assets in some cases. Cf. “Bubble Theory Of Money”, Gresham’s Law.
Once the speculation upside is gone, you would use Bitcoin because it’s the best available reserve and settlement asset. What are your other options? Inflationary USD or Yuan? Few rational actors would prefer to hold those.
Investors don't have to choose between investing in Bitcoin or parking their money in cash.
The stock market, real estate, commodities, and other assets don't lose their value if USD inflates.
The narrative that the only two choices are to buy Bitcoin or lose out to inflation is a fiction designed to convince people to buy more Bitcoin. Bitcoin isn't the only investment option.
> Inflationary USD or Yuan? Few rational actors would prefer to hold those.
Does the Fed have anything it can do on the demand side? I'm pretty rusty on my macroeconomics, but I thought you needed fiscal policy to buy stuff if you want to juice demand.
Edit: I thought it was obvious, yet in response to comment below - theoretically to get real inflation one has to adjust the M3 for the growth of the total amount of "stuff" in the economy. As that growth is just 1-2%/year , the M3 shape is visually indistinguishable from the real inflation on any given time period of up to several years.
In response to your edit, I don't know how you can claim that "real" (according to who? you?) inflation is somehow divorced from the purchasing power of a dollar. What matters to most humans is how far their wages go at the shop.
Hand-waving at money supply and "total amount of stuff" without reference to prices makes as much sense as arguing "Well obviously daily commutes were shorter in 2019 than 1919 because cars are much faster than horses. Just look at my chart of relative top speeds!"
> A more exact definition of inflation is a sustained increase in the general price level in an economy. Inflation means an increase in the cost of living as the price of goods and services rise.
> Inflation refers to a rise in the average level of prices sustained over time, which also corresponds to a fall in the internal (domestic) purchasing power of money.
