It is not possible to keep the price down with Crypto (as it is not possible to print) but it is possible to keep a price floor by buying up reserves. Trade has downward pressure.
Another example: the reason Japanese yen is valuable is because it allows me to trade English teaching for ramen, train rides, beer, housing, anything! Can gold do that?
It is backed by the Government/Army/JapaneseEconomy and is traded against other currencies. The purchasing power of Yen does not come from it being a unit of exchange, and the less ->
It is backed by the JapaneseEconomy - exactly. It is "backed" by the fact that lots of people are constantly giving and receiving valuable goods and services via Yen.
-> people use YEN to trade/exchange for stuff, and the more they hoard it/save it/set it aside, the higher the purchasing power per YEN will become all other things being equal.
But I will grant your point that for you as a user of YEN, the value for you comes from the easy of which you are able to get rid of the YEN in exchange for what your really want.
Remember "the Midas touch"? That's a such powerful story for a very good reason.
The Midas story was not about inflation but how being motivated by extreme greed can lead to the downfall of the person pursuing it. (Easy fix: Touch + Passphrase = Gold :P)
I think theres a slightly deeper meaning in there in that, money in and of itself is never the end goal. Gold is not the thing that anybody really wants, it's the things gold gets.
That is true for anything that is used as a medium of exchange/store of value. But it goes father to prestige, reputation social standing, it is what those things enable that attracts.
You can't eat a bar of gold! If food becomes scarce the food will be more valuable than the gold. If you didn't know where to buy food would you take gold for your last scraps?
I gotta disagree. There was no price floor for Tabasco the bull no matter how much people hoarded them - because they were useless. Velocity and usefulness correlate strongly.
If a person/group decides to set buy orders for Bitcoin at $1 and they have 21 million in reserves, then they have put a effective price floor on BTC, it is possible to do.
This is in contrast to keeping 1 BTC under 10 usd, that is impossible, since anyone with 210 million (a lot less, but extreme example) would be able to pump the price up by buying it.
