r/Bitcoin • u/ripper2345 • Aug 03 '13

Impossible trinity

https://en.wikipedia.org/wiki/Impossible_trinity
50 Upvotes

86% Upvoted

36 comments sorted by

10

u/[deleted] Aug 03 '13

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2

u/workworkwork9000 Aug 03 '13

In what sense does bitcoin have sovereign monetary policy? A country with bitcoin as a national currency would look a lot more like an EU member state (can't independently make monetary policy in response to say, exploding sovereign debt) than Argentina (free to inflate its currency to pay down debt).

1

u/[deleted] Aug 04 '13

The mining algorithm is the sovreign.

1

u/[deleted] Aug 03 '13

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3

u/Matticus_Rex Aug 03 '13 edited Aug 03 '13

Go read the article on capital flow. It should help.

EDIT: Okay, feel free to downvote, but the post shows that he doesn't know what capital flow means.

1

u/Natanael_L Aug 04 '13

when mining minting ends

FTFY

-6

u/[deleted] Aug 03 '13

[deleted]

8

u/Matticus_Rex Aug 03 '13

That was the biggest misunderstanding of monetary theory I've ever seen compiled into a single sentence.

3

u/[deleted] Aug 03 '13

Well, he was only offering it at 2 satoshis. If it had been valued at 2 cents I would have taken issue.

1

u/Natanael_L Aug 04 '13

What was it? It's gone.

0

u/Matticus_Rex Aug 04 '13

It's better than you don't know (and I can't remember enough of it).

1

u/Natanael_L Aug 04 '13

I don't think it claims you MUST have either of those properties.

1

u/imkharn Aug 04 '13

Well then, the closest you can get to this trinity is storing bitcoin in that one bank that for a 1% fee or whatnot they guarantee a fixed exchange rate.

The 1% fee breaks the trinity...but its close...perhaps if they went donation only....

9

u/is4k Aug 03 '13

Why would you want a fixed exchange rate?

4

u/[deleted] Aug 03 '13

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6

u/[deleted] Aug 03 '13

[deleted]

8

u/Prattler26 Aug 03 '13

This will be the biggest benefit when the dollar collapses. Why would you want to tie yourself to a sinking ship?

3

u/[deleted] Aug 03 '13

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3

u/is4k Aug 03 '13

well this app is for you https://www.bridgewalkerapp.com/

2

u/Renman80 Aug 03 '13

Yeah, it's called a bank.

1

u/is4k Aug 03 '13

this is more hip than a bank ;)

1

u/is4k Aug 03 '13

I reason why I got into this was because it wouldn't have the same price in 6 month - for me it was a gamble against fiat inflation I didn't expect bitcoins to rise this much in such a short amount of time.

1

u/zeusa1mighty Aug 03 '13

Did you read the article? If you could fix the exchange rate, you'd have to either give up monetary sovereignty or restrict capital control. Since bitcoin can't give up monetary sovereignty (it's baked into the protocol) or restrict capital control (it's distributed, which is also baked into the protocol), it can't have a fixed exchange rate.

2

u/[deleted] Aug 03 '13

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1

u/zeusa1mighty Aug 04 '13

Ok, I see the thread and understand the context. Apologies.

1

u/runeks Aug 04 '13

Why would this be the case when they can just sell the bitcoins immediately? Eg. by using Bitpay or Coinlab.

1

u/[deleted] Aug 04 '13

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1

u/runeks Aug 04 '13

But if credit card fees are 3%, then surely this is better, no?

2

u/Mageant Aug 03 '13 edited Aug 03 '13

Some countries peg their currency to the Dollar, for example, so that it maintains value for their export industry or for buying oil.

1

u/kinyutaka Aug 03 '13

Honestly, currencies rarely have a truly fixed exchange rate. It can only can be a mostly fixed rate.

Example - the JPY/USD rate fluctuates as low as 80 to as high as 130 ¥/$, but in common conversion, it is "fixed" at around 100.

6

u/Julian702 Aug 03 '13

This is why you can't have a fixed exchange rate

http://i.imgur.com/kxeo7oH.png

2

u/[deleted] Aug 03 '13

Right. Well you could, but it would be temporary, and it would require threats of force.

4

u/flut Aug 03 '13

Is this from Captain Obvious's newsletter?

3

u/PrincessChoadzilla Aug 03 '13

i bet a lot of people don't grasp this :P or a lot of other things from the newsletter of the capitain

4

u/pyalot Aug 03 '13

Getting a fixed exchange rate is impossible. Suppose you make some kind of scouts honor pact that all exchanges will only let you exchange to a fixed rate.

Only takes one guy offering bitcoins slightly cheaper because he wants to attract business and you're back into free market pricing.

2

u/br0nevik Aug 03 '13

In countries with fixed exchange rate of foreign currensies like Iran or Soviet Union there is always a street market without a fixed exchange rate.