Crypto like bitcoin is necessarily an appreciating asset because it is deflationary by its very nature. Over a long enough time period, if BTC were in fact behaving like a currency (that is, as a medium for the exchange of value, rather than a store of value) the value of BTC as expressed in exchangable goods must rise, unless the global production of goods contracts, and there is no reason to expect that to happen.
Just like any other good, there is a fluid rate of demand for money. If the supply of money is unable to increase with the demand for money, the relative value of the money increases.
This is exactly why USD is a poor store of value (it reliably depreciates by 1-3% annually) and a good currency (well-managed supply vs demand results in long-term predictability about the value of 1 USD, making it reliable to transact in).
>Crypto like bitcoin is necessarily an appreciating asset because it is deflationary by its very nature.
That assumes that the demand for cryptocurrencies remains constant. If the demand for cryptocurrencies drops faster than the deflation of the currency, then the value goes down.
Absolutely! My point is that it's ill-suited to be a currency because we know now that stable currencies need to be able to match supply to demand. Because of crypto's fixed supply, it behaves more like an asset (though it certainly need not be an appreciating asset).
Overall, I believe that a successful crypto will behave more like an asset than a currency. The failing ones are just dust.
Just like any other good, there is a fluid rate of demand for money. If the supply of money is unable to increase with the demand for money, the relative value of the money increases.
This is exactly why USD is a poor store of value (it reliably depreciates by 1-3% annually) and a good currency (well-managed supply vs demand results in long-term predictability about the value of 1 USD, making it reliable to transact in).