Here is a statement by Craig Wright given at this conference as quoted by Ryan X. Charles:
This assertion is not economically sound. Increased velocity of money is understood to be a signal of (value) inflation. Here we can see this phenomenon explained by a US Congressional Research Report on bitcoin:
“Regarding the velocity of money, if the increase in the use of Bitcoin leads to a decrease in need for holding dollars, it would increase the dollar’s velocity of circulation and tend to increase the money supply associated with any given amount of base money (currency in circulation plus bank reserves held with the Fed). In this case, for the Fed to maintain the same degree of monetary accommodation, it would need to undertake a compensating tightening of monetary policy. “
It’s quite intuitive. As people begin to VALUE one option over the other, the former loses velocity as the incentive is to hold on to it, whereas the latter which is declining in value GAINS velocity as people are willing (and trying) to part with it.
If the price/value of bitcoin WAS tied to its velocity, we could just start sending coins back and forth to each other indefinitely and create infinite wealth by scaling the block size to the moon.
I don’t think that would work because of economic considerations.
Wright is selling a “bad money” policy as described and warned about by John Nash:
…I wish to present the argument that various interests and groups, notably including “Keynesian” economists, have sold to the public a “quasi-doctrine” which teaches, in effect, that “less is more” or that (in other words) “bad money is better than good money”.