DEBUNKED: "The IFP destroys BCH soundness"

In recent weeks, I have noticed conversation floating around r/btc that claims the IFP destroys BCH soundness. The arguments that I've read in support of this claim are extremely weak, and I will be addressing them in this article.

First, let me define "currency" as a tool used by humans to facilitate trade. "Currency" possesses the following attributes:

• Divisible

• Durable

• (EDIT) Portable

• Fungible

• Unit of account

• Medium of exchange

Now, "sound money" is defined as "currency that is also a store of value". But what makes a currency a "store of value"? Well, simply put, there are many factors, however the important thing is that the currency retains its value over an extended period of time.

Historically, fiat currencies have not been considered "sound money", as they have all ultimately inflated into worthlessness. Governments and central banks, in their vein attempts to save their failing economies, print their currency into oblivion and, through this inflation, dramatically reduce the purchasing power of each note of currency, until citizens are hiking wheelbarrows full of the stuff down to the market. (e.g. the infamous hyperinflation of the Weimar Republic).

Bitcoin, as a currency, was built with inherent deflation, whereby the supply of circulating bitcoins decreases over time. Therefore, hyperinflation is impossible with Bitcoin, thus why it is so attractive to many that hold it.

But where does the IFP come into this equation? Essentially, IT DOESN'T.

The IFP does nothing to alter BCH's inflation rate, schedule, etc., therefore it does not affect BCH "soundness". Claiming otherwise is a faulty deduction based on a misunderstanding of history, "sound money", and the Bitcoin system.

Response to u/ErdoganTalk

From this post:

There is no need for a central bank for gold, and this lack of a need for an authority is what makes the gold sound.

This is entirely untrue. Gold was cumbersome and not ideal for a growing trade market. Therefore, early banks were constructed and became vaults for consumer gold. The bankers issued certificates for consumers to redeem gold deposits. Banks were the authority . It wasn't until banks issued certificates that could redeem more gold than they had stored, that the soundness of gold-backed money was destroyed. It was fractional-reserve banking that made gold-backed currency unsound.

The soundness [of Bitcoin Cash] is that nobody gets coins for free, and the resulting lack of need of an authority.

A couple things are wrong with this statement. First, in Bitcoin, miners offer Proof-of-Work to claim the block reward. Under the IFP, the miners provide developers a portion of this earned block reward with the expectation that future code will be written by those developers (i.e. not for free) to bolster the miners' infrastructure.

Second, BITCOIN IS OPERATED BY A DECENTRALIZED AUTHORITATIVE BODY (miners). If it is solely the existence of an authority that destroys the soundness of money, then the world has never experienced sound money, and Bitcoin can never become sound money.

Response to u/gr8ful4

Most of this post appears to be a conglomeration of random blobs of largely irrelevant Satoshi quotes, and the rest boils down to a massive misunderstanding of "sound money".

However, after sifting through the wall of text, his main point appears to be:

It is the constant abuse of power of a smart (or deceitful) minority in human history that gained tremendously at the expense of the majority by making money unsound.

Here, he is conflating the introduction of the IFP (and subsequent code commit by Bitcoin ABC) with "a minority gaining tremendously at the expense of the majority". However, as explained above, this isn't the case, because the IFP doesn't touch Bitcoin's inflation.

Conclusion

As outlined above, "sound money" is "currency that is a store of value". Historically, fiat currencies have hyperinflated, destroying their currency's purchasing power, and ultimately their soundness. The statement that "the IFP destroys BCH soundness" is WRONG, and is based on a misunderstanding of history, "sound money", and Bitcoin itself.

Thanks for reading!