A brief comment must be made about recent predictions for bitcoin to become some kind of international currency standard. Personally, I've never managed to get excited about a nonproductive asset with no usefulness outside of its perceived value, but a lot of people have gotten excited about it, and made a lot of money with it. Tesla announced last month that it purchased $1.5 billion worth of bitcoin, and plans to start accepting it as payment. Below is a chart comparing bitcoin futures to the Euro/Dollar over the last year.
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What I'm trying to understand is the fact that predictions for bitcoin adoption seem to be tied to its increasing value. For normal currencies, deflation is usually seen as a cause for major concern. One could imagine that if everyone is buying their Teslas with bitcoin, Tesla will have to continually decrease their prices (as the value of bitcoin rises). This will cause buyers to hold off on purchases. Why pay 1 bitcoin for a Tesla this week if it will probably only cost me .9 bitcoin next week? Meanwhile, Tesla is further stressed from the other side of the equation as the price it is now trying to sell cars for is less than what it paid workers and suppliers to build them. By the way, I originally planned to chart a few other major currencies for comparison, but they appeared to have lines pretty much identical to the Euro.
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