Just over the past year BTC has gone between $54K and $104K.
Currencies are subject to inflation, but in a well managed economy that is generally a single digit yearly percentage and fluctuates slowly, and the currency changes value in a single direction only.
Normal government currencies don't gain or lose 10% of their value over a few days in purchasing power, as regularly happens with Bitcoin.
The distinction between government and crypto currencies is wrong one to make.
I fail to see how gold-pegged, gasselized (demurraged at constant rate until they vanish down to UBI limit, except from government/CB wallets, with other assets also demurraged when sold/bought via cap gains style taxes), constant supply cryptocurrency would not be in fact better than the dollar and the euro and the yen, and it would be both inflation & deflation resistant.
Between Sep 2012 and Jul 2013 gold went from $1780 to $1210 (-32%).
Between Feb 2024 and today gold went from $2040 to $2950 (+45%).
That's a crazy amount of volatility you would never want as a currency. Can you imagine signing multi-year contracts denominated in that? Even monthly contracts! It would be madness.
It's a bidirectional relationship. The value of gold actually remained stable when the U.S. dollar was pegged to it. I view that as evidence for pegging stabilizing the value of the commodity it is pegged to. However is an simplification, because share of the dollar relative to other currencies policies has changed. I also only believe the system I depicted would work, if the exports of the commodity were restricted so that no one or only the central bank could sell it abroad.
Saying something is “pegged” is saying that the price is fixed. There doesn’t exist any volatility between pegged instruments because that’s what a peg means.
So you have to compare them to other things, which is what inflation (or deflation) measures. And gold pegged usd has volatility to other items in the economy greater than modern fiat usd.
You're near-certainly right that pegging in dollars would means some rate, let's for simplicity presume a constant ratio, between dollars and what it's begged to.
I think crux is what happens if we model two different currencies, one of which is begged, and the price of te commodity in each.
If after the conversion rate you can get cheap gold, that keeps golds value low and pegged currency's value high, I would guess.
Again I think restricting impots in the commodity is necessary to maintain supply.
> I fail to see how gold-pegged, gasselized […] constant supply cryptocurrency would not be in fact better than the dollar and the euro and the yen, and it would be both inflation & deflation resistant.
If you don't see it then then you may wish to read more economic history, as the history of gold-pegged currencies shows that they caused anything but stability:
And it was only after leaving the gold standard that countries started to recover from the Great Depression:
> In the end, recovery from the Great Depression does not begin until countries give up on the combination of the Bagehot Rule and of commitment to sound gold-standard finance. Those countries that have central banks willing to print up enough money so that people are willing to spend it--it is when you adopt such policies that your economy begins to recover. If you don’t, you become France, which sticks to the gold standard all the way up to 1937, and never gets a recovery. When World War II begins, Nazi Germany’s production--equal to France's in 1933--had doubled between 1933 and 1939. French production had fallen by 15%.
If you can always move to smaller denominations, deflation would not be an issue:
If the price of an apple at t_0 is $2 and (using arbitrary symbol for the other currency) §2, and at t_1 $20=§2, then at t_1 citiziens in the nation using § as currency would pay §0.2 for an apple, et cetera.
The other currency would have to use scientific notation, for cash.
(if deflation wasn't the the cause of that crisis, this is not an answer).
I don't know the best rule to use for the process, since there seems to be many potential combinations of rules for it, but the idea of forced-gesselization is that if you buy a house with the bad money from foreign gray markets dealer, when you try to sell the house, you are taxed as if house and the bad money you bought it (this type of situation would be gray area, as such requiring intervention and appraisal of actual value by government body, which is not to be desired; but such practice also would not have to be commonplace) with had been in the demurraged currency, e.g. for the duration of the ownership.
Normally we can think of sales value to mean value - tax, where tax = g(ownership_duration), where g is gesselization function, which would preferably remain same over time but doesn't have to be linear or simply value or function of time as long as it is simply enough high schooler can solve for it without a computer.
Nowhere near to the same extent.
Just over the past year BTC has gone between $54K and $104K.
Currencies are subject to inflation, but in a well managed economy that is generally a single digit yearly percentage and fluctuates slowly, and the currency changes value in a single direction only.
Normal government currencies don't gain or lose 10% of their value over a few days in purchasing power, as regularly happens with Bitcoin.