It's an implementation detail. Currently the reference wallet stores all transactions, but future versions will be able to prune old blocks and rely on more recent "reference blocks" as their starting point.

> Note that the US unlinked in 1970 and the last year that the GINI coefficient improved was 1973. FDR temporarily unlinked in 1933 and we had the great depression [1].

The U.S. domestic economy unlinked in 1933, permanently. Only international trade continued to use gold-backed currency, and it is that aspect which was finally eliminated in 1973.

Likewise you have mixed up your cause/effect for the Great Depression, which started 4 years before 1933. On the contrary, the very election of FDR in 1932 was due to the economic crisis, and the unlinking of gold reserves was in response to the depression, not the cause of it.

One funny thing is that many people who are otherwise economically intelligent get so confused with gold. Holding currency to a gold standard by some fixed price would be called "price control" in any other context, and we already know price controls to be bad policy. By unlinking currency from gold we can well and truly "let the market efficiently decide".

The biggest irony for me with regard to Bitcoin is that it proves the fiat concept. Bitcoin is literally worth nothing more than what people think it's worth; there's no physical thing of intrinsic worth underlying it after all. But this is of course more or less exactly the claim for fiat currency.

The gold standard is also inconvenient for progressive policies: it removes the floating of currency exchange rates, which tends to act as an automatic stabilizer. See the Eurozone to see how this played out over the last few years, since the Euro has the same technical effect on the member countries. If a country like Spain had had its own currency with a floating exchange rate, that currency would have automatically devalued against other European currencies, which would have acted as a big boost to the Spanish economy via increased exports. Instead, Spain got atrociously high unemployment.

The gold standard is just inconvenient, period. It restricts the policy space for governments. This can be a good thing, but in democracies - where the government mostly does act in the interest of the population[0] - I would say that it mostly ends up being a bad thing.

> FDR temporarily unlinked in 1933 and we had the great depression

Yes, both of these things happened. The important thing is the order in which they happened: The great depression happened first. Abandoning the gold standard was a somewhat late and indirect reaction to that. In fact, countries recovered roughly in the order in which they abolished the gold standard (see e.g. [1] for references).

Edit to add: As to the history of coin debasement, I genuinely wonder whether historians have got their causality right. There appears to be a self-reinforcing belief that historically, coin debasement always caused inflation. At a superficial glance, that story seems to fit the data, hence the self-reinforcement. However, there are some episodes in the Roman empire where it seems plausible that causality could have run in the other direction: Inflation came first, and the coins ended up being debased to match the reality of how much (or how little) they were still worth.

I know that gold bugs must deny the mere possibility of such a "reverse causality" on quasi-religious grounds, but a sober look at the data leaves quite a lot of room for this. Some of the inflation values use price data that is almost a century apart, and a 5x increase in price over a century is actually relatively modest inflation on a year-over-year basis, if you take the exponential nature of inflation into account. This level of inflation could easily arise endogenously, say out of modest wage-price pressure effects. Changing the coins to adjust to a new reality after a century is then merely reasonable administration.

This is not to say that the story of "bad emperor flooded the market with coins to fund wars" never happened. It's just to say that perhaps history was sometimes more complicated than what fits into a bug's brain.

[0] Yes, yes, come at me with your cynicism; and indeed modern democracies are imperfect. But compare today to the middle ages without prejudice, and you'll see what I mean.

[1] http://www.nber.org/chapters/c11482.pdf‎

> FDR temporarily unlinked in 1933 and we had the great depression

I always like pre hoc ergo propter hoc arguments.

Deflation is, in effect, valuing labor and productivity done in the past, relative to the future; inflation is, valuing labor and productivity done in the future relative to the past.

Deflation is fundamentally less dangerous than inflation, because there is less counterparty risk. Technology is supposed to be the "rising tide that lifts all boats", perhaps not surprisingly, technological goods decrease in price in spite of inflation. But by inflating we rob society of the value created by technology and distribute it to bankers and government contractors. It's really sad, and a large reason why the rich get richer and the poor get poorer.

I agree - I think that cryptocurrency will be an international standard in the future, just not in the way it is implemented with Bitcoins.

In the not too distant future, I think we are going to have a cryptocurrency that is widely used internationally.

Bitcoin is not headed in that direction, but that doesn't mean someone else can't solve the liquidity problem. Forced inflation may not be it though.