Deflationary money is a Good Thing

Deflationary money is a Good Thing

Original Postby ZmnSCPxj

Posted on: December 5, 2023 12:23 UTC

The email raises concerns about the potential issues that can arise when a contract is denominated in USD in relation to Bitcoin.

The writer suggests that by using USD, there is an inherent risk of third-party interference, specifically from government entities who have control over the exchange rate between USD and BTC. They express worry that such manipulation could alter the effective value of contractual obligations, favoring certain parties over others. This situation is described as preferential to the "rule of man" rather than the "rule of law," implying a lack of fairness and transparency.

Moreover, the sender of the email argues that unless the USD to BTC exchange rate is fixed, external influences, including lobbying activities, could unjustly impact the rate for monetary gain. The concern extends to the concept of an oracle problem, where reliance on an external source for accurate metric measurements could lead to corruption, particularly targeting those metrics or key inputs. This vulnerability could then be exploited by powerful entities with access to lobbying resources, thereby disadvantaging those without such means.

In conclusion, the author advocates for a simpler approach by suggesting that contracts should be denominated directly in BTC to avoid these complications. They refer to the principle of "Keep it simple, stupid" (KISS) as a guiding philosophy to mitigate the risks associated with third-party adjustments and maintain clarity and straightforwardness in financial agreements involving cryptocurrencies.