But bitcoin is a currency with deflation. If mtgox takes 500 btc, and returns 500 btc after some time, then it loses money. To compensate for deflation, mtgox should return only 95%-98% of bitcoins, keeping the rest.

Would you rather have 1 BTC today or 1 BTC tomorrow? Of course, you'd rather have one today. Because with one today, you can either spend one today or have one tomorrow. So if a bank wants 1 BTC from me today, it had better give me more than 1 BTC tomorrow. Otherwise, I'm giving up my opportunity to spend 1 BTC today for nothing. That's wasted value.

There are so many false premises involved in this argument that I have no idea where to start.

Hahaha. No.

Whether the currency is deflationary or not, 1 BTC today is always worth more than 1 BTC in a month. Because with 1 BTC today, you can have 1 BTC in a month or you can spend before that. So it has, today, whatever the value of 1 BTC in a month is expected to be plus whatever value there is in being able to spend it before that.

A currency cannot predictably deflate. It's like saying "gold is $1,000/oz today, but we all know it will be $5,000/oz in a year". That's impossible. People who didn't need money immediately would buy up all the gold until its price came very close to $5,000/oz now. Any *predictable* deflation will have already happened and its expected present value will already be bundled into the present cost.

1 BTC today includes the right to sit and hold that bitcoin and watch it appreciate in value. You can, of course, exercise that right by holding it. But you can also sell it to someone else for whatever the fair market value of that right is.

The reason BitCoins have been going up is not because of the deflation built into them but because they have been increasing in popularity, thus increasing the probability they will ever actually experience the deflation built into them.

Thank you, I was too lazy to write down the whole example.

What it is true is that under a deflationary system there is less incentive to go into debt so usually there is less debt in a deflationay system that under a inflationary system. Inflation promotes debt. But there are other factors that influence as well.

No do not introduce Interest into the Bitcoin market. The whole concept of interest is what is destroying the real fiat currencies of the world (USD, CAD, etc). It would last for awhile but eventually destroy the whole BTC economy..just look around the real world to see examples of that. Why not just setup the Banksters here too....NOT.

i replace this with a brainfart.... san mind was not thinking correctly

Usually real interest rates are lower under inflationary system becuase usually the newly printed money comes in through loans. Because banks have more money to loan real interest rates are lower, at least for a while (during the bubble phase, when the bubble pahse is over interest rates skyrocket).

While it could seem that more loans is better, its the contrary. Inflation stops growth because it creates malinvestments.

so profit doesn't exist either, eh?

jeez...a bunch of economic illiterates trying to run a currency.

work for  a car company. take out a loan from them to buy a car from them. earn part of their profits for your work in the future and pay back the loan with interest

everything "existed" and nothing is created out of thin air. as simple as this is, the real world works the same there are just more intermediary steps.


if bitcoin will ever be widely accepted, there automatically will banking, there will even be fractional reserve banking, there will be interest.

This is false, as several people have noted before in this post. Re-read the answers.