/biz/ - Business & Finance

>>26411734
>>26411929
something with a hard cap cannot be money because once the hard cap has been reached a liquidity crisis will form forcing people to abandon the currency and it is impossible to make loans with yields in the same currency as the loan
this means that something else, something without a hard cap, that is difficult, but not impossible to get more of has to be demanded as yield

let me give you an example
>21m btc
>10%, 6.3m of btc is loaned out with average yield of 8% and average amortize period of 10 years
>outstanding btc = 21m
>outstanding btc + yield = 42m btc
where do you get the additional 21m btc? what they could do is to require yield in another asset, like gold
this would mean that everyone would be out chasing gold and using gold in their day-to-day transactions, pushing btc to the side
also keep in mind that once 21m btc has been mined miners only make money from transactions - if no transactions are made they will go bankrupt and the network will become unsafe

what will happen is that a liquidity crisis will form and people will simply abandon btc and stop doing business in btc, because they can't get a hold of it, there won't be enough transactions made in btc to protect the network so malicious actors can easily take over and double spend

why do you think we don't do commerce in Rhodium? it's too damn rare, people can't get a hold of it to do the transactions they need to do business and survive

currencies can die just as easily from extreme deflation as extreme inflation