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This series is sponsored by Block Rewards, a Kelowna-based company that is focused on solutions for Canadian employers to integrate Bitcoin into their compensation, benefits, and retirement savings plan strategies.
In this episode of The Bitcoin Show, host Jim Csek from KelownaNow talks to Scott Dedels, CEO of Block Rewards, about the deflationary nature of Bitcoin currency.
Dedels goes into the first time he was exposed to the idea of deflation in Bitcoin. In 2020, amidst the uncertainties brought about by the global pandemic, Scott stumbled upon the book, The Price of Tomorrow: Why Deflation is the Key to an Abundant Future, by Jeff Booth.
In short, he explains that the “natural state of the market is deflation.”
“The reason we adopt new technologies is because they typically represent an improvement on the way things have been done before,” says Dedels. “So things should, over time, get cheaper and faster to produce, which should flow down to the base layer of the economy. It means everybody should be working less and having more.”
“So, the book goes on to argue that the challenge is sort of an irreconcilable difference between a money system that needs to continually dilute versus the reality of technology is that it should be making things cheaper."
"We need things to cost more in the future because we borrow money to pay for them now. And the only reason anybody would ever borrow money to pay for something like a house, is a great example. You're only going to borrow a million dollars to buy a house today and pay interest on it for 30 years if you believe that it'll be worth more than a million dollars, plus what you've paid in interest, at some point in the future."
Csek adds that inflation tends to favour those who have assets like real estate, and poses challenges for individuals purchasing basic goods like gas and groceries.
“Inflation is a form of taxation where people are taxed through the loss of purchasing power,” says Dedels. “So as the money supply is expanded, the purchasing power of the unit of a currency, in our case the dollar, diminishes over time.”
“We get sort of confused around target inflation and this idea that, you know, inflation is some sort of like a necessary component of an economic lubricant. Economics is a soft science, so that's a difficult statement to prove.”
If you want to delve deeper into the world of Bitcoin, listen to the full episode on YouTube, and stay tuned for more episodes in this series.
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