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11 07 2015 | by Victor Xing | Economics

What are strength and weakness of bitcoin?

Some of bitcoin’s characteristics can be perceived as superior to fiat currencies, although the same strength can also be seen as weakness

  1. Money supply growth is predictable and finite.  This is good for investors concerned about inflation, but many economists also argued that lack of money supply growth will constrain economic growth (built-in deflation)
    Bitcoin
    Built-in deflation
  2. Outside of a nation’s regulatory control.  To people wishing to avoid the hassle of banks quizzing source of cash deposit, bitcoin can be the preferred instrument.  Nevertheless, fiat currencies have a captured audience.  If enough users abandon bitcoin, its value will drop with no institution serving as backstop.
  3. Completely online, which can be both a convenience and curse.  There is low risk of seizure, but it probably can’t buy a bowl of noodles from the hole-in-the-wall.

Next article11 06 2015 | by Victor Xing | Economics

Is dollar strength good or bad for the US economy?